bear market

Image credit: All images belong to Aleph Blog

Well, finally the bear market… at 3/31/2002 the S&P 500 was priced to return a trice less than zero in nominal terms. After the pasting the market received today, that figure is 3.57%/year nominal (not adjusted for inflation). You would likely be better off in an ETF of 10-year single-A rated bonds yielding 4.7% — both for safety and return.

I will admit that my recent experiment buying TLT has been a flop. I added to the position today. My view is that the long end of the curve is getting resistant to the belly of the curve, and thus the curve is turning into the “cap” formation, where the middle of the curve is higher than the short and long ends. This is a rare situation. Usually, the long end rallies in situations like this. The only situation more rare than this is the “cup” formation where the middle of the curve is lower than the short and long ends.

I will have to update my my old post of “Goes Down Dou

A Sleepy Week for the Indices?

A Sleepy Week for the Indices?

Finance Press Release Finance Press Release 12.02.2021 15:45
For once, we have a week in 2021 where the market really didn't move all that much.Except for weed stocks that whipsawed GameStock-like and Bitcoin and Dogecoin making waves thanks to Lord Elon, it's really been kind of a boring week for the major indices.The S&P and Nasdaq closed at another record high Thursday (Feb. 11), while the Dow barely retreated from its own record high. The red-hot Russell has lagged this week.However, it’s all relative. No index has moved upwards or downwards more than about 0.30% week-to-date.It’s about time we had a week of relative quiet in the market.The sentiment is indeed still rosy right now. The economic recovery appears to be gaining steam, and the Q1 GDP decline everyone predicted might not be as sharp as we anticipated. We could also be days away from trillions of dollars of much-needed stimulus getting pumped into the economy.Earnings continue to impress, too, and are on pace to rise by over 20% in 2021. Since 1980, only 12 years have earnings increased by 15% or more. Except for 2018, the market gained an average of 12% in all of those years.We could also days away from FDA approval of a one-dose vaccine from Johnson and Johnson (JNJ).The COVID numbers and vaccine trend could truly turn the tide of things. More people in the U.S. have now been vaccinated than total cases, and the week kicked off (Feb. 8) with vaccine doses outnumbering new cases 10-1. Dr. Fauci also claims that vaccines could be available to the general public by April.But we're not out of the woods yet. Sure this week has been calm.But it’s almost been “too calm.”I still worry about complacency, valuations, and the return of inflation.“You wouldn’t know it from the sedate action in the averages,” but Wall Street is on “a highway to the danger zone,” CNBC ’s Jim Cramer said.“In a frothy market, stocks will have enormous rallies that are totally disconnected from the underlying fundamentals.”He’s not wrong.Look at the Buffett Indicator as of February 4. Where I track this indicator usually updates once a week and shows the total U.S. stock market valuation to the GDP. If you take the US stock market cap of $48.7 trillion and the estimated GDP of $21.7 trillion, we're nearly 224% overvalued and 84% above the historical average. This ratio has not been at a level like this since the dotcom bubble.Worse? This chart was dated February 4. The market’s only risen since then.This is what I mean by don’t be fooled by the relative calm of this week.The S&P 500’s forward 12-month P/E ratio is also well above its 10-year average of 15.8. The Russell 2000 is also back at a historic high above its 200-day moving average. Tech stock valuations are again approaching dotcom bust levels.Still not sold? Look at Goldman’s non-profitable tech index. It’s approaching an absurd 250% year-over-year performance.Bank of America also believes that a market correction could be on the horizon due to signs of overheating.While I don’t foresee a crash like we saw last March, I still maintain that some correction before the end of Q1 could happen.Corrections are healthy and normal market behavior, and we are long overdue for one. They are also way more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).A correction could also be an excellent buying opportunity for what could be a great second half of the year.Bank of America also echoed this statement and said that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and ‘as good as it gets’ earnings revisions.”The key word here- buyable.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one where I could help people who needed help, instead of the ultra-high net worth.With that said, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don't think that a decline above ~20%, leading to a bear market will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. The Streaky S&P Is Back at a Record Figure 1- S&P 500 Large Cap Index $SPXThe S&P continues to trade as a streaky index. It seemingly rips off multiple-day winning streaks or losing streaks weekly.After the S&P 500 ripped off a streak of gains in 6 of 7 days, it promptly went on a 3-day losing streak, followed by another record close.I would hardly call that a 3-day losing streak, though. I’d even say it was a boring week for the S&P 500 with muted moves.The outlook is healthy, though, especially when you consider earnings. More than 80% of S&P stocks that have reported earnings thus far have beaten estimates.What could be on tap for next week? Who even knows anymore. But if earnings keep on outperforming, and the sentiment remains stable, it could be another strong week.The S&P’s RSI is ticking up towards overbought. However, because it’s still below 70, and because of the streaky manner in which the index has traded, it remains a HOLD.A short-term correction could inevitably occur by the end of Q1 2021, but for now, I am sticking with the S&P as a HOLD.For an ETF that attempts to directly correlate with the performance of the S&P, the SPDR S&P ETF (SPY) is a good option.For more of my thoughts on the market, such as red-hot small-caps and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Got Bond Concerns?

Got Bond Concerns?

Finance Press Release Finance Press Release 17.02.2021 15:25
The market largely continued last week’s mixed moves, with the S&P and Nasdaq mildly retreating from record highs and the Dow eking out another record close.The sentiment remains mostly rosy thanks to earnings that continue to impress, plummeting virus numbers worldwide, indicators that the economic recovery is gaining steam, and imminent stimulus.But we’re not out of the woods yet, and I still worry about complacency and valuations.But now, you can add one more concern to the list- rising bond yields.On Tuesday (Feb. 16), the 10-year Treasury yield jumped 9 basis points to top 1.30% for the first time since February 2020. The 30-year rate also hit its highest level in a year.Why is this concerning?Rising interest rates=less attractive stocks.Sure, the banks benefit. But what do you think this means for growth sectors such as tech that have benefited from low-rates?You couple that with the fact that according to the Buffet Indicator (Total US stock market valuation/GDP), the market could be 228% overvalued, and tech stocks may be at valuations not seen since the dotcom bubble? Genuine concerns.A rebound in rates could also put a dent in the economic recovery if both companies and consumers find it increasingly expensive to borrow.While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.Bank of America also echoed this statement and said last week that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and ‘as good as it gets’ earnings revisions.”Corrections are healthy and normal market behavior, and we are long overdue for one. They are also way more common than most realize. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).A correction could also be an excellent buying opportunity for what could be a great second half of the year.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. The Streaky S&P Is Back at a Record Figure 1- S&P 500 Large Cap Index $SPXThe S&P continues to trade as a streaky index. It seemingly rips off multiple-day winning streaks or losing streaks weekly.Before Tuesday’s (Feb. 16) “decline” (if you can call it that), here’s how the S&P has traded in February. It kicked off the month by ripping off a streak of gains in 6 of 7 days. It then promptly went on a 3-day losing streak, followed by a two-day winning streak and more record closes.Then it declined a 0.06% to kick off the President’s Day shortened trading week.More than 80% of S&P stocks that have reported earnings have beaten estimates, which is quite impressive. Yes, the forward P/E ratio is historically high. However, this P/E ratio has coincided with growing earnings.With the index also up 5.9% month-to-date and a healthy outlook for the second half of the year, we could have some more room to run.While the S&P’s RSI is still hovering around overbought levels, it’s remained stable at a HOLD level, mainly reflecting its muted moves over the last week and change.A short-term correction could inevitably occur by the end of Q1 2021, but for now, I am sticking with the S&P as a HOLD.For an ETF that attempts to directly correlate with the performance of the S&P, the SPDR S&P ETF (SPY) is a good option.For more of my thoughts on the market, such as red-hot small-caps and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Is That the S&P 500 And Gold Correction Finally?

Is That the S&P 500 And Gold Correction Finally?

Monica Kingsley Monica Kingsley 17.02.2021 16:21
The stock bears finally showed they aren‘t an extinct species – merely a seriously endangered one. Yesterday‘s close though gives them a chance to try again today, but they should be tame in expectations. While there is some chart deterioration, it‘s not nearly enough to help fuel a full on bearish onslaught in the S&P 500. There is no serious correction starting now, nothing to really take down stocks seriously for the time being.The Fed remains active, and monetary policy hasn‘t lost its charm (effect) just yet. Commodities and asset price inflation has been in high gear for quite some time, yet it‘s not a raging problem for the Main Street as evidenced by the CPI. Food price inflation, substitution and hedonistic adjustments in its calculation, are a different cup of tea, but CPI isn‘t biting yet.Meanwhile, the real economy recovery goes on (just check yesterday‘s Empire State Manufacturing figures for proof), even without the $1.9T stimulus and infrastructure plans. Once we see signs of strain in the job market (higher participation rate, hourly earnings and hours worked), then the real, palpable inflation story can unfold. But we‘re talking 2022, or even 2023 to get there – and the Fed will just let it overshoot to compensate for the current and prior era.Meanwhile, the wave of new money creation (we‘re almost at double the early 2020 Fed‘s balance sheet value - $4T give or take then vs. almost $7.5T now – and that‘s before the multiplier in commercial banks loan creation kicks in) keeps hitting the markets, going into the real economy, predictably lifting many boats. It‘s my view that we have to (and will) experience a stock market bubble accompanied by the precious metals and commodities one – to a degree, simultaneously, for the stock market is likely to get under pressure first. Again, I am talking the big picture here – not the coming weeks.Meanwhile, the intense talk of S&P 500 correction any-day-week-now is on, just as outrageous gold, silver and miners‘ drop projections. Let‘s examine the bear market is gold – some say that the late 2015 marked bottom, I‘m of the view that the 2016 steep rally was a first proof of turning tide. But the Fed got serious about tightening (raising rates, shrinking its balance sheet), and gold reached the final bottom in Aug 2018. Seeing through the hawks vs. dove fights at the Fed in the latter half of 2018 (December was a notable moment when Powell refused to the markets‘ bidding, remained hawkish in the face of heavy, indiscriminate selling across the board – before relenting).Since then, gold was slowly but surely gathering steam, and speculation in stocks was on. The repo crisis of autumn 2019 didn‘t have a dampening effect either – the Fed was solidly back to accomodative back then. These have all happened well before corona hit – and it wasn‘t able to push gold down really much. The recovery from the forced selling, this deflationary episode (which I had notably declared back in summer 2020 to be a one-off, not to be repeated event), was swift. Commodities have clearly joined, and the picture of various asset classes taking the baton as inflation is cascading through the system, is very clear.Quoting from my yesterday‘s analysis:(…) The dollar keeps topping out, which I called it to do a week ago – and its losses have been mounting since. Long-dated Treasury yields are rising in tandem, which is a great environment for financials (XLF ETF) and emerging markets (EEM ETF). The former benefit from the widening yield curve, the latter from plain devaluation.Gold performance is still short-term disappointing, and silver and platinum are leading. But it‘s the miners and the moves between various mining indices, that work to soothe the bulls‘ impatience. Understandable as we are in 5+ months of downside correction whose target I called on Aug 07 in the article S&P 500 Bulls Meet Non-Farm Payrolls, witnessing record pace of new money creation.The ongoing economic recovery will get new stimulus support, and that will work to broaden the precious metals advance. Again quoting my Friday‘s words:(…) in our print-and-spend-happy world, where the give or take $1.9T stimulus will sooner or later come in one way or another, we better prepare on repricing downside risk in the precious metals, and also better not to fixate on the premature bubble pop talk too closely. I have been stating repeatedly that things have to get really ridiculous first, and this just doesn‘t qualify yet in my view. All those serious correction calls have to wait – in tech and elsewhere, for we‘re going higher overall – like it or not.Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookFinally, there is a whiff of bearish activity. Will it last or turn out a one day event as thus far in Feb? The chances for a sideways correction to last at least a little longer, are still on, however the short- and medium-term outlook remains bullish.Credit Markets and TreasuriesHigh yield corporate bonds (HYG ETF) wavered yesterday, trading in a sideways pattern during recent days. Encouragingly, yesterday‘s session attracted increasing volume, which I read as willingness to buy the dip. One dip and done?Long-term Treasuries (TLT ETF) are the key chart on my radar screen right now. The rise in yields is accelerating, and if progressing unmitigated, would throw a spanner into many an asset‘s works. Even though it‘s not apparent right now, there is a chance that we‘ll see a slowdown, even a temporary stabilization, over the coming sessions. The larger trend in rates is higher though, and in the dollar to the downside.Gold, Silver and CommoditiesThe heat gold is taking from rising Treasury yields, has gotten weaker recently, with the decoupling from rising nominal (real) yields being a good omen for precious metals universally. The dynamics of commodity price inflation, dollar hardly balancing under the weight of unprecedented economic policy and twin deficits, attests to the gold upleg arriving sooner rather than later.Let‘s step back, and compare the performance of gold, silver, copper and oil. The weekly chart captures the key turns in monetary policy, the plunge into the corona deflationary bottom, and crucially the timing and pace of each asset‘s recovery. Gold and silver were the first to sensitively respond to activist policies, followed by copper, and finally oil. Is their current breather really such a surprise and reversal of fortunes? Absolutely not.SummaryThe bearish push in stocks has a good chance of finally materializing today. How strong will its internals be, will it entice the bulls to step in – or not yet? The stock bull run is firmly on, and there are no signals thus far pointing to an onset of a deeper correction with today‘s price action.The gold bulls continue lagging behind their silver counterparts, predictably, with both under continued pressure. The yields are rising a bit too fast, taking the metals along – temporarily, until they decouple to a greater degree. Combined with the miners‘ signals, and unprecendented monetary and fiscal stimulus, unfolding real economy recovery, inflation making its way through the system, and the dollar struggling to keep its head above water, the new PMs upleg is a question of time.
S&P 500 Correction – No Need to Hold Onto Your Hat

S&P 500 Correction – No Need to Hold Onto Your Hat

Monica Kingsley Monica Kingsley 18.02.2021 16:09
Yesterday‘s bearish price action in stocks was the kind of shallow, largely sideways correction I was looking for. Not too enthusiastic follow through – just rocking the boat while the S&P 500 bull run goes on. Stocks are likely to run quite higher before meeting a serious correction. As I argued in yesterday‘s detailed analysis of the Fed policies, their current stance won‘t bring stocks down. But it‘s taking down long-term Treasuries, exerting pressure on the dollar (top in the making called previous Monday), and fuelling commodities – albeit at very differnt pace. The divergencies I have described yesterday, center on weak gold performance – not gaining traction through the monetary inflation, instead trading way closer in sympathy with Treasury prices. Gold has frontrunned the other commodities through the corona deflationary shock, and appears waiting for more signs of inflation. It didn‘t make a final top in Aug 2020, and a new bear market didn‘t start. It‘s my opinion that thanks to the jittery Treasury markets, we‘re seeing these dislocations, and that once the Fed focuses on the long end of the curve in earnest, that would remove the albatross from gold‘s back.I can‘t understate how important the rising yields are to the economy (and to the largest borrower, the government). Since 1981, we‘ve been in one long bond bull market, and are now approaching the stage of it getting questioned before too long. The rates are rising without the real economy growing really strongly, far from its potential output, and characterized by a weak labor market. Not exactly signs of overheating, but we‘ll get there later this year still probably.It‘s like with generating inflation – the Fed policies for all their intent, can‘t command it into happening. The Treasury market is throwing a fit, knowing how much spending (debt monetization) is coming its way, and the Fed‘s focus is surely shifting to yields at the long end. Bringing it under control would work to dampen the rampant speculation in stocks, and also lift gold while not hurting commodities or real economy recovery much. Sounds like a reasonable move (yield curve control), and I believe they‘re considering it as strongly as I am talking about it.Let‘s quote yesterday‘s special report on gold, inflation, and commodities:(…) the wave of new money creation (we‘re almost at double the early 2020 Fed‘s balance sheet value - $4T give or take then vs. almost $7.5T now – and that‘s before the multiplier in commercial banks loan creation kicks in) keeps hitting the markets, going into the real economy, predictably lifting many boats. It‘s my view that we have to (and will) experience a stock market bubble accompanied by the precious metals and commodities one – to a degree, simultaneously, for the stock market is likely to get under pressure first. Again, I am talking the big picture here – not the coming weeks.Let‘s examine the bear market is gold – some say that the late 2015 marked bottom, I‘m of the view that the 2016 steep rally was a first proof of turning tide. But the Fed got serious about tightening (raising rates, shrinking its balance sheet), and gold reached the final bottom in Aug 2018. Seeing through the hawks vs. dove fights at the Fed in the latter half of 2018 (December was a notable moment when Powell refused to the markets‘ bidding, remained hawkish in the face of heavy, indiscriminate selling across the board – before relenting).Since then, gold was slowly but surely gathering steam, and speculation in stocks was on. The repo crisis of autumn 2019 didn‘t have a dampening effect either – the Fed was solidly back to accomodative back then. These have all happened well before corona hit – and it wasn‘t able to push gold down really much. The recovery from the forced selling, this deflationary episode (which I had notably declared back in summer 2020 to be a one-off, not to be repeated event), was swift. Commodities have clearly joined, and the picture of various asset classes taking the baton as inflation is cascading through the system, is very clear.Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsFinally, a daily downswing – not meaningful, but it‘s as good as it gets. The slightly lower volume though shows that there is not a raging conviction yet that this sideways move is over.The market breadth indicators aren‘t at their strongest. Both the advance-decline line and advance-decline volume dipped negative, which isn‘t worrying unless you look at new highs new lows as well. While still positive, $NYHL is showing a divergence by moving below the mid-Feb lows. Seeing its decline to carve a rounded bottom a la end Jan would be a welcome sight to the stock bulls. Before then, nothing stands in the way of muddling through in a shallow, corrective fashion.Credit Markets and TreasuriesThe divergence in both leading credit market ratios – high yield corporate bonds to short-term Treasuries (HYG:SHY) and investment grade corporate bonds to longer-dated Treasuries (LQD:IEI) – show the bond market strains. HYG:SHY clearly supports the S&P 500 rally, while LQD:IEI isn‘t declining in tandem with long-term Treasuries. Instead, it‘s carving out a bullish divergence as it‘s trading well above the Sep and Oct lows – unlike the TLT.Speaking of which, such were my words yesterday, calling for a Treasury reprieve to happen soon:(…) Long-term Treasuries (TLT ETF) are the key chart on my radar screen right now. The rise in yields is accelerating, and if progressing unmitigated, would throw a spanner into many an asset‘s works. Even though it‘s not apparent right now, there is a chance that we‘ll see a slowdown, even a temporary stabilization, over the coming sessions. The larger trend in rates is higher though, and in the dollar to the downside.The dollar is still topping out, and a new daily upswing doesn‘t change that – I look for it to be reversed, and for the new downleg reasserting itself.Gold, Silver and CommoditiesThe encouraging, budding short-term resilience of gold to rising Treasury yields, got a harsh reality check yesterday. While the latter ticked higher, gold declined regardless. Closing at the late Nov lows, it‘s still relatively higher given the steep rise in long-term Treasury yields since. A bullish divergence, but a more clear sign of (directional) decoupling (negating this week‘s poor performance) is needed.Let‘s look again at gold, silver, and commodities in the medium run. Silver decoupled from gold since the late Nov bottom in both, while commodities haven‘t really looked back since early Nov. Till the end of 2020, gold wasn‘t as markedly weak as it has become since, and actually tracked the silver recovery from the late Nov bottom. And the reason it stopped, are the long-term Treasury yields, which quickened their rise in 2021. It looks like an orderly decline in TLT is what gold would appreciate – not a rush to the Treasury exit door.SummaryThe bearish push in stocks has a good chance of finally materializing also today. How strong will its internals be, will it entice the bulls to step in again? Signs are for this correction to run a bit longer in time – but the stock bull run is firmly on, and there are no signals thus far pointing to an onset of a deeper correction right away.The gold bulls recovered a little of the lost ground, but that doesn‘t flip the short-term picture their way in the least. While the yellow metal is leading silver today, its overall performance in the short run remains disappointing, and the silver-gold spread trade I introduced you to a week ago, a much stronger proposition. Still, given the miners‘ signals, unprecendented monetary and fiscal stimulus, unfolding real economy recovery, inflation making its way through the system, and the dollar struggling to keep its head above water, the new PMs upleg is a question of time.
For stocks, has the “Rational Bubble” Popped?

For stocks, has the “Rational Bubble” Popped?

Finance Press Release Finance Press Release 19.02.2021 15:38
In keeping with last week’s theme, the market has mainly traded sideways this week. However, that correction I’ve been calling for weeks? We have potentially started.While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.Bank of America also echoed this statement and said last week that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”Yes, the sentiment is still positive. That won’t change overnight. Vaccines seem more effective than we thought, especially against other variants of the virus. All that extra stimulus money and record low-interest rates could keep pushing stocks to more records and stimulate pent-up consumer spending. It’s not like the Fed is going to switch this policy up anytime soon, either.They don’t call it a stimulus for nothing.For weeks we’ve likely been in a rational bubble. Dhaval Joshi , the chief European investment strategist for BCA Research, has said that low bond yields meant the rally we’ve seen with stocks made sense.“Rational, because the nosebleed valuations are justified by a fundamental driver. And not just any fundamental driver, but the most fundamental driver of all – the bond yield.”Take a look at this chart comparing a “rational bubble” to an “irrational bubble.”But now? Things have possibly changed. Complacency, valuations, surging bond yields, and inflation concern me.They’re all connected. But look especially into the 10-year yield. It’s hovering around 1.30% for the first time in over a year.Why is this concerning?Rising interest rates=less attractive stocks.Look at this other chart. Forward P/E ratios are continuing to rise along with bond yields. In high-growth sectors, such as tech, this is especially concerning. The chart shows, in fact, that tech earnings yields have now been surpassed by the bond yield plus a fixed amount.The only three ways this can be resolved are for stock prices to decline, bond yields to fall, or earnings to rise and improve stock valuations. Considering earnings season is over, only options 1 or 2 seem feasible in the near-term.You combine this info with the Buffet Indicator (Total US stock market valuation/GDP), and you have a market that could be 228% overvalued.I’ve already correctly called the Russell 2000’s pullback after how much it’s overheated. Since February 9th, when I switched the call to a sell, it’s declined roughly 3.40%.More could follow.Look. Corrections are healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.A correction could also be an excellent buying opportunity for what could be a great second half of the year.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. A Needed Cool Down for the Russell 2000Figure 1- iShares Russell 2000 ETF (IWM)Since February 9, the Russell 2000 small-cap index has lagged behind the other indices after significantly overheating. I switched my call to a SELL then, and it promptly declined by 3.40%.I do love small-caps for 2021, though, and I really like this decline. If it declines about another 1.50%, I’d feel more confident switching the call to a BUY.As tracked by the iShares Russell 2000 ETF (IWM) , small-cap stocks have been on a rampage since November.Since the market’s close on October 30, the IWM has gained nearly 44.5% and more than doubled ETFs’ returns tracking the larger indices. If you thought that the Nasdaq was red hot and frothy, you have no idea about the Russell 2000.Not to mention, year-to-date, it’s already up a staggering 14%.Judging from these types of returns, the IWM’s decline since February 9 is hardly shocking. But for me, it’s still not enough, outside of switching the call to a HOLD.It pains me not to recommend you to BUY the Russell just yet. I love this index’s outlook for 2021. Aggressive stimulus, friendly policies, and a reopening world could bode well for small-caps. Consumer spending, especially for small-caps, could be very pent-up as well.But we need to just hold on and wait for it to cool down just a little bit more for a better entry point.HOLD. If and when there is a deeper pullback, BUY for the long-term recovery.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
The Yield Harbinger for Stocks

The Yield Harbinger for Stocks

Finance Press Release Finance Press Release 22.02.2021 15:32
Indices, for the most part, closed fractionally higher to end the week. But a new headwind for stocks could be more concerning - rising bond yields.That correction I’ve been calling for weeks could have potentially started.While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.Bank of America also echoed this statement and said last week that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”But rather than looking at the past, let’s take a look at what’s on tap this week to get you ready for what could potentially be a volatile week ahead.This coming week, be on the lookout for the January leading indicator index, durable goods orders, and personal income and spending.On Tuesday, we will also receive the February Consumer Confidence Index; on Wednesday, the Census Bureau will release upcoming home sales. On Friday, the University of Michigan will release its Consumer Sentiment Index.Of course, as we’ve seen in weeks past, jobless claims from the previous week will be announced on Thursday too. After outperforming the last few weeks, the jobless claims announced last Thursday (Feb. 18) grossly underperformed and reached their worst levels in nearly a month.Earnings season has been outstanding but is winding down now. Be on the lookout this week for earnings from Royal Caribbean (RCL) on Monday (Feb. 22), Square (SQ) on Tuesday (Feb. 23), Nvidia (NVDA) on Wednesday (Feb. 24), and Virgin Galactic (SPCE) and Moderna (MRNA) on Thursday (Feb. 25).We have the makings of a volatile week, and as I mentioned before, a possible correction.Look. Don’t panic. We have a very market-friendly monetary policy, and corrections are more common than most realize. Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.While it won’t happen for sure, I feel like it’s inevitable because of how much we have surged over the last few months.A correction could also be an excellent buying opportunity for what could be a great second half of the year.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Will the Russell 2000 Overheat Again?Figure 1- iShares Russell 2000 ETF (IWM)The Russell 2000 popped on Friday (Feb. 19) after seeing a bit of a pullback since February 9. Between February 9 and the close on February 18, the Russell 2000 lagged behind the other indices after significantly overheating. I switched my call to a SELL then on the 9th, and it promptly declined by 3.40% before Friday’s session.I foresaw the pullback but cautiously saw a rally and switched to a HOLD call before it popped over 2% on Friday (Feb. 19).I do love small-caps for 2021, and I liked the decline before Friday. However, I feel like the index needs a minimum decline of 5% from its highs before switching it to a BUY.As tracked by the iShares Russell 2000 ETF (IWM) , small-cap stocks have been on a rampage since November.Since the market’s close on October 30, the IWM has gained nearly 47.56% and more than doubled ETFs’ returns tracking the larger indices. If you thought that the Nasdaq was red hot and frothy, you have no idea about the Russell 2000.Not to mention, year-to-date, it’s already up a staggering 16.38%.It pains me not to recommend you to BUY the Russell just yet. I love this index’s outlook for 2021. Aggressive stimulus, friendly policies, and a reopening world could bode well for small-caps. Consumer spending, especially for small-caps, could be very pent-up as well.But we just need to hold on and wait for it to cool down just a little bit more for a better entry point.HOLD. If and when there is a deeper pullback, BUY for the long-term recovery.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Kiss of Life for Gold

Kiss of Life for Gold

Monica Kingsley Monica Kingsley 22.02.2021 16:24
The narrow trading range in stocks continues, and the shallow sideways correction will eventually resolve itself with another upleg. The signs are countless, and the riskier part of the credit market spectrum agrees. As money flows from the Tresury markets, and sizable cash balances are sitting on many a balance sheet, there is plenty of fuel to power the S&P 500 advance.With volatility in the tame low 20s and the put/call ratio again moving down, the bears‘ prospects are bleak. As I wrote last week, their time is running out, and a new stock market upleg approaches. It‘s the bond market that‘s under pressure, with both investment grade corporate bonds and long-dated Treasuries suffering in the accelerated decline.Gold is the most affected, as the sensitivity of its reaction to the rising long-tern yields, has picked up very noticeably. How long before these draw both the Fed‘s attention and action – what will we learn from Powell‘s testimony on Tue and Wed? And when will the much awaited stimulus finally arrive, and force repricing beyond the metals markets?Before that, gold remains on razor‘s edge, while silver leads and platinum flies for all the green hydrogen promise. The dollar has given back on Thu and Fri what it gained two days before, and remains in its bear market. Not even rising yields were able to generate much demand for the world reserve currency. Its lower prices stand to help gold thanks to the historically prevailing negative correlation, counterbalancing the Treasury yields pressure.Plenty of action that‘s bound to decide the coming weeks‘ shape in the precious metals. And not only there as oil experienced 2 days of lossess in a row – practically unheard of in 2021 so far. On Saturday, I‘ve added a new section to my site, Latest Highlight, for easier orientation in the milestone calls and timeless pieces beyond the S&P 500 and gold. Enjoy!Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe weekly indicators suggest that a reversal is still not likely. There is no conviction behind the weekly decline, and signs are still pointing to a sideways consolidation underway.The daily chart reflects the relatively uneventful trading – we‘re in a phase of bullish base building before powering off to new highs. See how little the daily indicators have retreated from their extended readings, and the barely noticeable price decline associated.S&P 500 InternalsAll the three market breadth indicators show improved readings, and my eyes are on new highs new lows throwing their weight behind the prior two indicators‘ advance. The overall impression is one of balance.The value to growth (VTV:QQQ) ratio shows that tech (XLK ETF) has fallen a bit out out of step recently – we‘re undergoing another microrotation into value stocks. The stock market leadership is thus broadening, confirming the findings from the advance-decline line (and advance-decline volume) examination.Credit MarketsOne chart to illustrate the bond market pressures – high yield corporate bonds are holding gained ground while investment grade corporate bonds and long-dated Treasuries are plunging like there is no tomorrow. With each of their rebound attempt sold, the dislocations are increasing – a great testament to the euphoric stage of the stock market advance. Gold and TreasuriesGold price action isn‘t as bearish as it might seem based on last week‘s moves. Yes, the readiness to decline in sympathy with rising yields, is diconcerting, but the yellow metal stopped practically at the late Nov lows, and refused to decline further. Low prices attracted buying interest, and due to the overwhelmingly negative sentiment for the week ahead, the yellow metal may surprise on the upside. Time for the bulls to prove themselves as the tone of coming weeks‘ trading in gold is in the balance.The daily chart‘s correlation coefficient has moved into strongly positive territory in 2021, illustrating the headwinds gold faces. Despite the prevailing wisdom, such strongly positive correlation isn‘t the rule over extended periods of time. That‘s the message of the daily chart – but let‘s step back and see the bigger picture similarly to the way I did on Friday witht the $HUI:$GOLD ratio.Not an encouraging sight at the moment. The tightness of mutual relationship is there, and given the decreased focus on timing (one candle representing one week) coupled with the correlation coefficient being calculated again over a 20 period sample, the week just over shows that regardless of the post-Nov resilience, gold is clearly getting under more pressure.Gold and DollarLet‘s do the same what I did about long-term Treasuries and gold, also about the dollar and gold. Their historically negative correlation is receding at the moment as the two face their own challenges. The key question is when and from what level would the fiat currency and its nemesis return to trading in the opposite directions. Such a time is highly likely to be conducive to higher gold prices.On the weekly chart, the negative correlation periods are winning out in length and frequency. Certainly given the less sensitive timining component through weekly candlesticks and 20-period calculation, the current strength and level of positive correlation is rather an exception and not a rule. Combining this chart‘s positive correlation between the two with the daily chart‘s negative yet rising readings, highlights in my view a potential for seeing an upset in the momentary relationship.In other words, the gold decline over the past now almost 7 months going hand in hand with mostly sliding dollar, would turn into higher gold prices accompanied by lower dollar values. How much higher gold prices, that depends on the long-term Treasuries market – that‘s the one playing the decisive role, not the dollar at the moment.Gold, Silver and MinersSilver is doing fine, platinum very well, while gold struggles and needs to prove itself. That‘s the essence of the long silver short gold trade idea – the silver to gold ratio attests to that.Quoting from Friday‘s analysis:(…) The dynamics favoring silver are unquestionable – starting from varied and growing industrial applications, strengthening manufacturing and economy recovery, poor outlook in silver above ground stockpile and recycling, to the white metal being also a monetary metal. Silver is bound to score better gains than gold, marred by the Bitcoin allure, would. Final chart of today‘s extensive analysis is about the two miners to gold ratios, and the divergencies they show. The ETF-based one (GDX:GLD) is sitting at support marked by both the late Nov and late Jan lows, while $HUI:$GOLD is probing to break below its late Jan lows, and these were already lower than the respective late Nov lows.Both ratios are sending a mixed picture, in line with the theme of my latest reports – gold is on razor‘s edge, and the technical picture is mixed given its latest weakness. That‘s the short run – I expect that once the Fed‘s hand is twisted enough in TLT and TLH, and speculation on yield curve control initiation rises, the focus in the precious metals would shift to inflation and its dynamics I‘ve described both on Wed and Fri. SummaryThe sellers in stocks aren‘t getting far these days, and signals remain aligned behind the S&P 500 advance to reassert itself. Neither the Russell 2000, nor emerging markets are flashing divergencies, and the path of least resistance in stocks remains higher.Gold‘s short-term conundrum continues - positive fundamentals that are going to turn even more so in the near future, yet the key charts show the king of metals under pressure, with long-term Treasury yields arguably holding the key to gold‘s short-term future. The decoupling events seen earlier this month, got a harsh reality check in the week just over. Yet, that‘s not a knock-out blow – the medium- and long-term outlook remains bright, and too many market players have rushed to the short side in the short run too.
It‘s Only Tech That‘s Sold – Not S&P 500, Gold Or Silver

It‘s Only Tech That‘s Sold – Not S&P 500, Gold Or Silver

Monica Kingsley Monica Kingsley 23.02.2021 15:52
S&P 500 is getting under modest pressure, and technology is to blame. Is the correction about to turn nasty from sideways? Still no signs of that, even as the investment grade corporate bonds are being sold of as hard as long-term Treasuries. Yet, these corporate instruments have only now broken below their late Oct lows – unlike long-dated Treasuries, whose price action resembles free fall.These government debt instruments are arguably the key asset class for every precious metals investor to watch. What used to be gentle decoupling signs over the latest weeks and months, got thoroughly tested the prior week. Yet, I stood firm in not calling gold down and out. The support zone at late Nov lows generated a rebound that was oh so likely to materialize.Silver naturally outperformed, both copper and oil had a strong day, and agrifoods are making new highs. The inflation dynamics described in Friday‘s article aptly called Why the Sky Is Not Falling in Precious Metals, continues unabated, and the pressure keeps building inside the metals and commodities. Not even the dollar managed to benefit from the rising yields – the resumption of its bear market I called on Feb 08, is one of the 2021 themes. Money keeps flowing from the Treasuries market, and there is plenty sitting on the sidelines (corporate or private) to still deploy and power stocks and precious metals higher. Also those ready to withstand Bitcoin volatility (hello, the weekend Elon Musk tweet follow through), stand to benefit – cryptos are behaving like a store of value, a hedge against currency debasement. I wrote in my very first 2021 analysis that the Bitcoin correction wouldn‘t get far.Powell‘s testimony is about to bring volatility, but does it have the power to change underlying trends? Not really – while his latest high profile assessments brought about a downswing, stocks recovered in spite of the GameStop (contagion?) drama too. Should we see a replay of the above, new highs are coming – and they are, in both stocks and precious metals. We‘re in a commodities supercycle on top!Let‘s get right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe daily chart shows yesterday‘s turn of events clearly. The volume increased, indicating that the bulls will need to grapple with more downside.Both the advance-decline line and advance-decline volume have curled noticeably, yet new highs new lows continues higher. That‘s a confirmation of the broad based nature of the stock market advance, further illustrated with the following chart.What if all the constituent shares in the S&P 500 had equal weight (i.e. there is no $NYFANG)? The above chart is the reflection – and it‘s challenging the latest highs. The rotation theme I‘m discussing so often, means in this case taking the baton from tech, and seeing it pass to value stocks. Such broad advance is a healthy characteristic of bull runs far from making a top.TechnologyHere is the culprit behind yesterday‘s decline – on increasing volume, technology (XLK ETF) has plunged. Yet it‘s the semiconductors (XSD ETF) that I am looking at for clues as to how reasonable has the decline been. And given how the tech is holding up, it‘s a bit accentuated.Credit MarketsHigh yield corporate bonds to short-term Treasuries (HYG:SHY) ratio is still behaving reasonably – the overlaid S&P 500 prices (black line) aren‘t accelerating to the downside. Thus far, everything keeps pointing to stocks behaving a bit more sensitively than throughout 2021 mostly, yet far from crashing or showing their readiness to. The real correction has to wait still – this is not the real deal.Gold, Silver and TreasuriesGold price action indeed proved not to be as bearish. Finally, we‘re seeing a clear refusal to move down even as Treasury yields continue to plunge. How long will this new dynamics stick, where would it take the yellow metal? I treat it as a valuable first swallow.The scissors between gold and silver keep widening, and the white metal again outperformed yesterday. That‘s exactly the dynamics of the new precious metals upleg that I‘m expecting.Both depicted miners to gold ratios show a clear pattern of post Nov resilience. GDX:GLD is not breaking to new lows, while $HUI:$GOLD rejected them. Bobbing around, searching for a local bottom before launching higher? That‘s my leading scenario.SummaryThe unfolding correction got a new twist with yesterday‘s downswing in stocks, and unless tech gets its act together, appears set to run further. Emerging markets fell harder than the Russell 2000 yesterday, which is another proof that the correction isn‘t yet over.Gold and silver price action remain encouraging, and the same can be said about oil and many other commodities. Once the stimulus bill is passed, the positive fundamentals that are going to turn even more so, given the Fed‘s accomodative policies. Will these work to stave off the rising Treasury yields as well? If so, then gold‘s fundamentals got a crucial boost, which would soon be seen in the technicals too. As I wrote yesterday, the metals didn‘t get a knock-out blow – the medium- and long-term outlook remains bright, and too many market players on the short side in the short run, means a high likelihood of a reversal – which is precisely what we saw.
Shortest Stock Correction Ever

Shortest Stock Correction Ever

Finance Press Release Finance Press Release 24.02.2021 15:32
What a day that was. What started off looking like a sea of red not seen in months ended with the Dow and S&P in the green.It was an overdue plummet- at least that’s what I thought at the start of the day. The Dow was down 360 points at one point, and the Nasdaq was down 3%.But by the end of the day, Jay Powell played the role of Fed Chair and investor therapist and eased the fears of the masses.The Dow closed up, the S&P snapped a 5-day losing streak, and the Nasdaq only closed down a half of a percent!You really can’t make this up.The day started gloomily with more fears from rising bond yields.Sure, the rising bonds signal a return to normal. But they also signal inflation and rate hikes from the Fed.But Powell said “not so fast” and eased market fears.“Once we get this pandemic under control, we could be getting through this much more quickly than we had feared, and that would be terrific, but the job is not done,” Powell said .He also alluded to the Fed maintaining its commitment to buy at least $120 billion a month in U.S. Treasuries and agency mortgage-backed securities until “substantial further progress is made with the recovery.While the slowdown (I’d stop short of calling it a “downturn”) we’ve seen lately, namely with the Nasdaq, poses some desirable buying opportunities, there still could be some short-term pressure on stocks. That correction I’ve been calling for weeks may have potentially started, despite the sharp reversal we saw today.Yes, we may see more green this week. But while I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.Bank of America also echoed this statement and said, “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”With more earnings on tap for this week with Nvidia (NVDA) on Wednesday (Feb. 24) and Virgin Galactic (SPCE) and Moderna (MRNA) on Thursday (Feb. 25), buckle up.The rest of this week could get very interesting.Look. Don’t panic. We have a very market-friendly monetary policy, and corrections are more common than most realize. Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.A correction could also be an excellent buying opportunity for what could be a great second half of the year.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- To Buy or Not to Buy?Figure 1- Nasdaq Composite Index $COMPWhat a difference a few weeks can make!Before, I was talking about the Nasdaq’s RSI and to watch out if it exceeds 70.Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted by 4.5% since February 12 and is trending towards oversold levels! I hate to say I’m excited about this recent decline, but I am. This has been long overdue, and I’m sort of disappointed it didn’t end the day lower.Now THAT would’ve been a legit buying opportunity.While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony. Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after today, I feel more confident in the Nasdaq as a SHORT-TERM BUY.But remember. The RSI is king for the Nasdaq . If it pops over 70 again, that makes it a SELL in my book.Why?Because the Nasdaq is trading in a precise pattern.In the past few months, when the Nasdaq has exceeded 70, it has consistently sold off.December 9- exceeded an RSI of 70 and briefly pulled back.January 4- exceeded a 70 RSI just before the new year and declined 1.47%.January 11- declined by 1.45% after exceeding a 70 RSI.Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.I like that the Nasdaq is below the 13500-level, and especially that it’s below its 50-day moving average now. I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.But the pullback hasn’t been enough.Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Finally- the Stock Market Tanks

Finally- the Stock Market Tanks

Finance Press Release Finance Press Release 26.02.2021 16:07
Surging bond yields continues to weigh on tech stocks. When the 10-year yield pops by 20 basis points to reach a 1-year high, that will happen.Tuesday (Feb. 23) saw the Dow down 360 points at one point, and the Nasdaq down 3% before a sharp reversal that carried to Wednesday (Feb. 24).Thursday (Feb. 25) was a different story and long overdue.Overall, the market saw a broad sell-off with the Dow down over 550 points, the S&P falling 2.45%, the Nasdaq tanking over 3.50%, and seeing its worst day since October, and the small-cap Russell 2000 shedding 3.70%.Rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP heat up without hiking rates, say welcome back to inflation.I don’t care what Chairman Powell says about inflation targets this and that. He can’t expect to keep rates this low, buy bonds, permit money to be printed without a care, and have the economy not overheat.He may not have a choice but to hike rates sooner than expected. If not this year, then in 2022. I no longer buy all that talk about keeping rates at 0% through 2023. It just can’t happen if bond yields keep popping like this.This slowdown, namely with the Nasdaq, poses some desirable buying opportunities. The QQQ ETF, which tracks the Nasdaq is down a reasonably attractive 7% since February 12. But there still could be some short-term pressure on stocks.That correction I’ve been calling for weeks? It may have potentially started, especially for tech. While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of March could happen.I mean, we’re already about 3% away from an actual correction in the Nasdaq...Bank of America also echoed this statement and said, “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”Look. This has been a rough week. But don’t panic, and look for opportunities. We have a very market-friendly monetary policy, and corrections are more common than most realize.Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.A correction could also be an excellent buying opportunity for what could be a great second half of the year.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- To Buy or Not to Buy?Figure 1- Nasdaq Composite Index $COMPThis downturn is so overdue. More pain could be on the horizon, but this road towards a correction was needed for the Nasdaq.Before February 12, I would always discuss the Nasdaq’s RSI and recommend watching out if it exceeds 70.Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted by nearly 7% since February 12 and is trending towards oversold levels! I hate to say I’m excited about this recent decline, but I am.While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony the other day (even if I don’t totally buy into it). Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after its recent slowdown, I feel more confident in the Nasdaq as a SHORT-TERM BUY.The RSI is king for the Nasdaq . Its RSI is now under 40, which makes it borderline oversold.I follow the RSI for the Nasdaq religiously because the index is simply trading in a precise pattern.In the past few months, when the Nasdaq has exceeded an overbought 70 RSI, it has consistently sold off.December 9- exceeded an RSI of 70 and briefly pulled back.January 4- exceeded a 70 RSI just before the new year and declined 1.47%.January 11- declined by 1.45% after exceeding a 70 RSI.Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.I like that the Nasdaq is almost the 13100-level, and especially that it’s below its 50-day moving average now.I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Worst for Stocks Over?

Worst for Stocks Over?

Finance Press Release Finance Press Release 01.03.2021 15:39
Is the worst of what the last few weeks brought over? February started off with so much promise, only to be ruined by surging bond yields.The way that bond yields have popped has weighed heavily on growth stocks. Outside of seeing a minor comeback on Friday (Feb. 26), the Nasdaq dropped almost 7% between February 12 and Friday’s (Feb. 26) close.Other indices didn’t fare much better either.The spike bond yields, however, in my view, are nothing more than a catalyst for stocks to cool off and an indicator of some medium to long-term concerns. But calling them a structural threat is a bit of an overstatement.Rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP heat up without hiking rates, inflation may return.I don’t care what Chairman Powell says about inflation targets this and that. He can’t expect to keep rates this low, buy bonds, permit money to be printed without a care, and have the economy not overheat.He may not have a choice but to hike rates sooner than expected. If not this year, then in 2022. I no longer buy all that talk about keeping rates at 0% through 2023. It just can’t happen if bond yields keep popping like this.So was the second half of February the start of the correction that I’ve been calling for? Or is this “downturn” already over?Time will tell. While I still do not foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of this month could happen.Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in almost a year.A correction could also be an excellent buying opportunity for what could be a great second half of the year.Pay attention to several things this week. The PMI composite, jobs data, and consumer credit levels will be announced this week.We have more earnings on tap this week too. Monday (March 1), we have Nio (NIO) and Zoom (ZM), Tuesday (March 2) we have Target (TGT) and Sea Limited (SE), Wednesday (March 3), we have Okta (OKTA) and Snowflake (SNOW), and Thursday (March 3) we haveBroadcom (AVGO).My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:The downturn we experienced to close out February could be the start of a short-term correction- or it may be a brief slowdown. A further downturn by the end of the month is very possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- a Buyable Slowdown?Figure 1- Nasdaq Composite Index $COMPThe Nasdaq’s downturn was so overdue. Even though more pain could be on the horizon, I like the Nasdaq at this level for some buying opportunities.If more losses come and the tech-heavy index dips below support at 13000, then it could be an even better buying opportunity. It can’t hurt to start nibbling now, though. If you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.Plus, if Cathie Wood, the guru of the ARK ETFs that have continuously outperformed, did a lot of buying the last two weeks, it’s safe to say she knows a thing or two about tech stocks and when to initiate positions. Bloomberg News ’ editor-in-chief emeritus Matthew A. Winkler wouldn’t have just named anyone the best stock picker of 2020.Before February 12, I would always discuss the Nasdaq’s RSI and recommend watching out if it exceeds 70.Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted almost 7% since February 12 and is closer to oversold than overbought. !While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony last week (even if I don’t totally buy into it). Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after its recent slowdown, I feel more confident in the Nasdaq as a SHORT-TERM BUY.The RSI is king for the Nasdaq . Its RSI is now around 40.I follow the RSI for the Nasdaq religiously because the index is merely trading in a precise pattern.In the past few months, when the Nasdaq has exceeded an overbought 70 RSI, it has consistently sold off.December 9- exceeded an RSI of 70 and briefly pulled back.January 4- exceeded a 70 RSI just before the new year and declined 1.47%.January 11- declined by 1.45% after exceeding a 70 RSI.Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.I like that the Nasdaq is almost at its support level of 13000, and especially that it’s below its 50-day moving average now.I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Mixed Start for Stocks in March

Mixed Start for Stocks in March

Finance Press Release Finance Press Release 03.03.2021 15:08
After March kicked off with a session that indicated the worst for stocks may be over (for now), Tuesday saw the indices sell-off towards the close.At least Rocket Mortgage (RKT) had a good day, though! And, at least the 10-year yield didn’t spike either. But that could change. Yields ticked up overnight to 1.433%, after President Biden pledged enough vaccine supply to inoculate every American adult by the end of May.So, where do we go from here? This positive economic and health news is excellent for reopening. But rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP scorch without hiking rates, inflation may return.I don’t care what Chairman Powell says about inflation targets this and that. The price of gas and food is increasing already. In fact, according to Bloomberg, food prices are soaring faster than inflation and incomes.For January, Consumer Price Index data also found that the cost of food eaten at home rose 3.7 percent from a year ago — more than double the 1.4 percent year-over-year increase in the prices of all goods included in the CPI.Can you imagine what this was like for February? Can you imagine what it will be like for March? I’m not trying to sound the alarm - but be very aware. These are just the early warning signs.So about March. Will it be more like Monday or Tuesday? Was the second half of February the start of the correction that I’ve been calling for? Or is the “downturn” already over? Only time will tell. While I still do not foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of this month could happen.Rising bond yields are concerning. Inflation signs are there. But structurally, I don’t think it will crash the market (yet).Corrections are also healthy and normal market behavior, and we are long overdue for one. It’s been almost a year now. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).A correction could also be an excellent buying opportunity for what could be a great second half of the year.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. A further downturn by the end of the month is very possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- a Buyable Slowdown?Figure 1- Nasdaq Composite Index $COMPThe Nasdaq’s slowdown has been long overdue. Even though more pain could be on the horizon, I like the Nasdaq at this level for some buying opportunities.But I’d prefer it drop below support at 13000 for real buying opportunities.But it can’t hurt to start nibbling now. If you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.Plus, it’s safe to say that Cathie Wood, the guru of the ARK ETFs, is the best growth stock picker of our generation. Bloomberg News ’ editor-in-chief emeritus Matthew A. Winkler seems to think so too. Her ETFs, which have continuously outperformed, focus on the most innovative and disruptive tech companies out there. Not to put a lot of stock in one person. But it’s safe to say she knows a thing or two about tech stocks and when to initiate positions- and she did a lot of buying the last few weeks.I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.Before February 12, I would always discuss the Nasdaq’s RSI and recommend watching out if it exceeds 70.Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted almost 5.5% since February 12 and is closer to oversold than overbought!But it’s still not enough.Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after its recent slowdown, I feel more confident in the Nasdaq as a SHORT-TERM BUY.The RSI is king for the Nasdaq . Its RSI is now around 45.I follow the RSI for the Nasdaq religiously because the index is merely trading in a precise pattern.In the past few months, when the Nasdaq has exceeded an overbought 70 RSI, it has consistently sold off.December 9- exceeded an RSI of 70 and briefly pulled back.January 4- exceeded a 70 RSI just before the new year and declined 1.47%.January 11- declined by 1.45% after exceeding a 70 RSI.Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.Again- if the index drops below 13000, and the RSI hits undeniably overbought levels, get on the train.But because we haven’t declined just enough, I am making this a SHORT-TERM BUY. But follow the RSI literally and take profits once you have the chance to.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Weak Jobs Data, Stocks and Gold

Weak Jobs Data, Stocks and Gold

Monica Kingsley Monica Kingsley 03.03.2021 16:19
Stocks gave up some of Monday‘s strong gains, but I find it little concerning in the sub-3,900 pre-breakout meandering. It‘s about time, and a play on the tech sector to participate meaningfully in the coming rally (or at least not to stand in the way again). Talking obstacles, what about today‘s non-farm employment change, before the really key Fri‘s release? A bad number makes it less likely for market participants to bet on the Fed raising rates soon – but frankly, I don‘t understand where this hawkish sentiment is coming from, now when we‘re not at even talking taper. Raising rates in the current shape of the recovery, where we have commodities and financial asset prices rising, and that‘s about it? No, the current economic recovery isn‘t strong enough to entertain that thought. The need for stimulus asap is obvious. Thus, prior trends in the commodities and currency arenas are likely to continue, and not even the current long-term Treasuries stabilization can prevent the greenback from falling more than temporarily.Just as I wrote yesterday about stocks:(…) All right, we‘re seeing a rebound in progress, on the way to new highs.Gold scored modest gains yesterday, but these aren‘t enough to flip its short-term outlook bullish. Yes, it‘s sitting within the strong support zone (with another one over $40 further lower), and it isn‘t breaking down. It could actually stage a rebound precisely off this support zone next, as sharp rallies are born during the opposite sentiment clearly prevailing, which is what we have in gold now.Silver remains relatively solid, and commodities aren‘t breaking down. We have a month historically strong for copper, and I talked both yesterday and Monday what that means for the copper to oil ratio – and its relationship to gold, given the very accomodative monetary policy without real end in sight. This is then checked against nominal rates matching up against inflation, inflation expectations.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 Outlook and Its InternalsYesterday‘s downswing didn‘t attract much volume, making it a short-term hesitation That‘s the meandering, the search for direction just below the 3,900 mark that I had been tweeting about yesterday. If you look at the equal weighted S&P 500 chart (RSP ETF), it‘s clear that new highs are still a little off given the sectoral balance of power.The market breadth indicators reflect the daily indecisiveness fittingly. While not worrying in themselves, they‘re showing that Monday‘s session wasn‘t the beginning of an endless bullish streak. Rather, it‘s just a part of the bullish turn that would over time prevail more convincingly.Credit MarketsThe key leading credit market ratio – high yield corporate bonds to short-dated Treasuries (HYG:SHY) – is slightly leaning bullish here. And that‘s good given the talk of bubble bursting, significant correction just ahead (started) – that‘s what I am looking for in uncertain times. Ideally though, such a bond market leadership should last a bit longer than one day, to lend it more credibility.TechnologyTechnology (XLK ETF) once again reversed to the downside, or so the chart says. While high, the volume isn‘t trustworthy – it doesn‘t stand comparison to the visually similar early Sep pattern, which was followed by a break to new lows in the latter half of the month. Then, as the overlaid S&P 500 (black line) shows, high beta pockets and value sectors have assumed leadership, powering the S&P 500 advance.DollarThe USD index is keeping close to the 91 mark, and yesterday‘s candle reveals that the potential upside isn‘t probably all that great. This is consistent with the dollar being in a bear market, sliding to new lows in 2021 with likelihood bordering on certainty. Plain and simple, it‘ll be on the defensive regardless of where long-term rates go.Gold and SilverGold had a good chance to rebound higher throughout this week, but didn‘t – given its Monday‘s performance, I had some reservations even as the support zone held, and upswing could easily follow – especially given the positive copper to oil ratio‘s move, or TLT not putting fresh pressure. But that‘s not happening in today‘s pre-market session, as the support‘s lower border is being tested again.Silver keeps holding the $26 level, and still trades at the 50-day moving average. While it‘s lagging behind both platinum and copper, its chart is (unlike gold‘s) bullish. Remember, the most bullish thing prices can do, is to rise. Not to rebound and fizzle out, only to rebound and fizzle out again, the way we see in gold as it keeps offering both bearish and bullish signs.OilOil keeps trading in a bullish fashion, and the 3-day long correction hasn‘t broken even Feb local lows yet. While we‘re for increased volatility in here, the uptrend remains strong, and volume currently doesn‘t support a deep correction theory. Just look how little have the retreating daily indicators achieved when it comes to the underlying price move? That‘s a reflection of a strong uptrend, which would be however best advised to resume sooner rather than later so as not to lose the technical advantage.SummaryStock bulls are on a recovery path, and new all time highs are basically a question of when the tech would step up to the plate again. Despite today‘s premarket weakness reaching well below the 3,870 level, the S&P 500 internals and credit markets performance (including foreign bonds) doesn‘t indicate that much downside potential currently. This correction‘s shape is largely in, and I mean the price downside – patience though will be needed before seeing new highs.Gold remains stuck in its support zone, unable to rally, not breaking down. The copper advantage of yesterday is lost for today, but seeing it and silver recover would be the most likely outcome once the immediate threat of rising Treasury yields retreats more noticeably. Gold is far from out of the woods, and flirting with the support level without a convincing rebound, is dangerous to the bulls.
Correction for Nasdaq- More Indices to Follow?

Correction for Nasdaq- More Indices to Follow?

Finance Press Release Finance Press Release 05.03.2021 15:31
I called Jay Powell's bluff a week ago. Remember when he said last week that we're still far from The Fed's inflation targets?Well, I was right to doubt him. The market didn't like his change in tone Thursday (Mar. 5).You see, when bond yields are rising as fast as they have, and Powell is maintaining that Fed policy won't change while admitting that inflation may " return temporarily ," how are investors supposed to react? On the surface, this may not sound like a big deal. But there are six things to consider here:It's a significant backtrack from saying that inflation isn't a concern. By admitting that inflation "could" return temporarily, that's giving credence to the fact that it's inevitable.The Fed can't expect to let the GDP scorch without hiking rates. If inflation "temporarily returns," who is to say that rates won't hike sooner than anyone imagines?Fool me once, shame on me, fool me twice...you know the rest. If Powell changed his tune now about inflation, what will he do a few weeks or months from now when it really becomes an issue?Does Jay Powell know what he's doing, and does he have control of the bond market?A reopening economy is a blessing and a curse. It's a blessing for value plays and cyclicals that were crushed during COVID and a curse for high-flying tech names who benefitted from "stay-at-home" and low-interest rates.The Senate will be debating President Biden’s $1.9 trillion stimulus plan. If this passes, as I assume it will, could it actually be worse for the economy than better? Could markets sell-off rather than surge? Once this passes, inflation is all but a formality.Look, it's not the fact that bond yields are rising that are freaking out investors. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. But it's the speed at which they've risen that are terrifying people.According to Bloomberg , the price of gas and food already appear to be getting a head start on inflation. For January, Consumer Price Index data also found that the cost of food eaten at home rose 3.7 percent from a year ago — more than double the 1.4 percent year-over-year increase in all goods included in the CPI.The month of January. Can you imagine what this was like for February? Can you imagine what it will be like for March?I'm not trying to sound the alarm- but be very aware. These are just the early warning signs.So, where do we go from here? Time will tell. While I still do not foresee a crash like we saw last March and feel that the wheels remain in motion for a healthy 2021, that correction that I've been calling for has already started for the Nasdaq. Other indices could potentially follow.Finally.Corrections are healthy and normal market behavior, and we have been long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).Most importantly, this correction could be an excellent buying opportunity.It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be careful, but be a little bold right now too.There's always a bull market somewhere, and valuations, while still somewhat frothy, are at much more buyable levels now.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. A further downturn by the end of the month is very possible, but I don't think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- From Overbought to Oversold in 3 Weeks?Figure 1- Nasdaq Composite Index $COMPThe Nasdaq is finally in correction territory! I have been waiting for this. It’s been long overdue and valuations, while still frothy, are much more buyable. While more pain could be on the horizon until we get some clarity on this bond market and inflation, its drop below 13000 is certainly buyable.The Nasdaq has also given up its gains for 2021, its RSI is nearly oversold at about 35, and we’re almost at a 2-month low.It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.Plus, it’s safe to say that Cathie Wood, the guru of the ARK ETFs, is the best growth stock picker of our generation. Bloomberg News ’ editor-in-chief emeritus Matthew A. Winkler seems to think so too. Her ETFs, which have continuously outperformed, focus on the most innovative and disruptive tech companies out there. Not to put a lot of stock in one person. But it’s safe to say she knows a thing or two about tech stocks and when to initiate positions- and she did a lot of buying the last few weeks.I think the key here is to “selectively buy.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.I also think it’s an outstanding buying opportunity for big tech companies with proven businesses and solid balance sheets. Take Apple (AAPL), for example. It’s about 30% off its all-time highs. That is what I call discount shopping.What’s also crazy is the Nasdaq went from overbought 3 weeks ago to nearly oversold this week. The Nasdaq has been trading in a clear RSI-based pattern, and we’re at a very buyable level right now.I like the levels we’re at, and despite the possibility of more losses in the short-run, it’s a good time to start to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Is the Pain Over?

Is the Pain Over?

Finance Press Release Finance Press Release 08.03.2021 15:37
The theme of last week was primarily the same as the previous few weeks- rising bond yields and inflation fears caused stocks to crumble.Look, it's not the fact that bond yields are rising that are freaking out investors. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. But it's the speed at which they've risen that are terrifying people. So far this year, the 10-year yield has soared 72%Fed Chair Jay Powell's statement that inflation could "temporarily return" did not help matters much last week either. However, despite the fears, the indices really did not perform all that badly the previous week after a Friday (Mar. 5) reversal. The Dow Jones managed to gain 1.8%, the S&P eked out a 0.8% gain, and after briefly touching correction territory and giving up its gains for the year, the Nasdaq managed to decline only -2.1%.So what's on tap for this week? Is the downturn overblown and already over?This is a massive week for market sentiment. The Senate, first and foremost, passed President Biden's $1.9 trillion stimulus plan over the weekend. On the one hand, stocks could pop from this. On the other hand, this makes inflation a foregone conclusion. Remember this, too- when the market gets what it expects, it's usually a sell signal rather than a buy signal. Markets look forward. Not to the past, and not to the present.Important data being released this week also includes inflation data, initial claims, and consumer sentiment.Time will tell where we go from here. While I still do not foresee a crash like we saw last March and feel that the wheels remain in motion for a healthy 2021, inflation is a genuine concern and could be here already.According to Bloomberg , the price of gas and food already appear to be getting a head start on inflation. For January, Consumer Price Index data also found that the cost of food eaten at home rose 3.7 percent from a year ago — more than double the 1.4 percent year-over-year increase in all goods included in the CPI.This could only be the start too. In its 2021 outlook report, the Economic Research Service for the U.S. Department of Agriculture forecast the food cost from grocery stores to rise 1 to 2% this year.Moody's Analytics chief economist Mark Zandi also believes that Wall Street is significantly underestimating inflation's seriousness and warns it could affect every sector in the market — from growth to cyclicals."Inflationary pressures will develop very quickly," he said. "I don't think there's any shelter here."I'm not trying to sound the alarm- but be very aware. These are just the early warning signs.I still feel that a correction of some sort is imminent. The Nasdaq touched it briefly last week and is still about 2% away from one. Other indices could possibly follow. But don't fret. Corrections are healthy and normal market behavior, and we have been long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).Most importantly, this correction could be an excellent buying opportunity.It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be cautious, but be a little bold too.There's always a bull market somewhere, and valuations, while still somewhat frothy, are at much more buyable levels now.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. A further downturn by the end of the month is very possible, but I don't think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- Buyable but Beware of the RisksFigure 1- Nasdaq Composite Index $COMPThe Nasdaq is no longer in correction territory, nor is it negative for 2021 any longer. But beware- this could change very quickly. More pain could be on the horizon until we get some clarity on this bond market and inflation. However, this Nasdaq downturn is long overdue and starting to be buyable.If you bought at the bottom on Friday before the afternoon reversal and made some quick gains, good on you. It actually didn’t end up being THAT bad of a week for the Nasdaq after Friday’s (Mar. 5) reversal.Be that as it may, Friday’s (Mar. 5) reversal does not mean we’re out of the woods. According to Morgan Stanley’s chief U.S. equity strategist Mike Wilson , “10-year yields finally caught up to other asset markets. This is putting pressure on valuations, especially for the most expensive stocks that had reached nosebleed valuations.”Expensive stocks? Nosebleed valuations? Sounds like tech to me.Wilson also said that once valuation correction and repositioning are finished, then growth stocks can potentially “rejoin the party.”The Nasdaq is now mostly flat for the year, its RSI is closer to oversold than overbought, and we’re at almost a 2-month low.It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.I think the key here is to “selectively buy.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.I also think it’s an outstanding buying opportunity for big tech companies with proven businesses and solid balance sheets. Take Apple (AAPL), for example. It’s about 15% off its January 26th highs. That is what I call discount shopping.I like the levels we’re at, and despite the possibility of more losses in the short-run, it’s a good time to start to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as when small-caps will be buyable, more thoughts on inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Is Gold Now Replaying 2010-2012?

Is Gold Now Replaying 2010-2012?

Finance Press Release Finance Press Release 09.03.2021 14:57
The 2019-2021 gold chart is disturbingly similar to that of 2010-2012, but it does not have to be the harbinger of a bear market.Many ancient cultures saw history as cyclical. According to this view, society passes through repeated cycles. Can this apply to gold as well? I’m not referring here to the simple fact that we have both bull and bear markets in the precious metals – I refer here to the observation that gold’s price pattern seen in 2019-2021 mirrors that of 2010-2012 . Please take a look at the chart below.As you can see, in both periods, gold was steadily rising to a peak in the third quarter of the second year. A decade ago, the yellow metal gained 29 percent in 2010 and 74 percent as it hit the top. Then, it declined 19 percent by the end of 2011. Fast forward to more recent times. Gold gained 18.4 percent in 2019 and 62 percent at the peak. Afterwards, it declined 9 percent by the end of 2020.So, although the magnitude has now been weaker than in the aftermath of the Great Recession , the pattern is quite similar. The next chart – which presents the normalized gold prices in both periods to indices (when the starting point equals 100) – nicely illustrates how gold in 2019-2021 closely resembles gold from 2010-2012.This similarity may be disturbing. Should the pattern hold, then gold could go down significantly and stay in a sideways trend for years. As a reminder, this is what happened a decade ago. Gold bulls fought until the end of 2012, when they gave up and the yellow metal entered a full bear market, plunging 45 percent from the top to the bottom in December 2015. Then, it stayed generally flat till the end of 2018. If this cycle replays, we could see the price of gold go below $1,200 by the end of 2024.To be clear, there are some arguments to support the bearish case . Just as in the 2010s, the world is recovering now from the global economic crisis . The recession is over and the prospects are only better. Perhaps they’re not rosy, but they’re certainly better than many previously expected, which is what matters for the financial markets. As the worst is behind us, the risk appetite is returning, which could put gold and other safe-haven assets into oblivion. Actually, some could even argue that gold may now plunge even earlier, as a decade ago it was supported by the European sovereign debt crisis , which peaked in 2011-2012.However, there are also important reasons why gold could break the pattern and diverge from the 2010-2012 trend. First, we now have a much more dovish Fed . The U.S. central bank slashed the federal funds rate much quicker and expanded its balance sheet more decisively. Additionally, to avoid a taper tantrum caused by its announcement about tapering asset purchases, this time the Fed will normalize its monetary policy in a very, very gradual way, if at all. It means that interest rates will stay lower for longer. Lastly, the U.S. central bank changed its monetary policy framework, i.e., it prioritized the labor market over price stability and became more tolerant to higher inflation .Second, we also have a much easier fiscal policy . Even before the global pandemic , Trump significantly expanded budget deficits , but the Great Lockdown made them even larger. As pundits believe that the fiscal response in the aftermath of the global financial crisis of 2007-2009 was too small, they now want to go big – indeed, Biden’s $1.9 trillion economic plan is waiting to be passed by Congress.Third, this recovery might be more inflationary than a decade ago . This is because not only did the monetary base increase, but the broad money supply did as well. Last time, the Fed injected a lot of liquidity to the banking sector to bailout the banks. Now, the money has flowed much more through Main Street and the household sector, which could turn out to be more inflationary when all this money will be spent on goods and services. Also, last time we observed some deleveraging in the private sector, while now the supply of loans is continuously increasing at a positive rate. We are also already observing reflation in the form of a commodity boom, so gold may follow suit.To sum up, the patterns seen in the gold market in 2010-2012 and 2019-2021 are remarkably similar. So, the recent gold’s weakness may be really disturbing. However, this resemblance does not have to be a harbinger of further problems coming for gold bulls . After all, as Mark Twain is reputed to have said, “history doesn’t repeat itself, but it often rhymes”. Indeed, the macroeconomic and political environment is now clearly different than a decade ago – it’s more fundamentally positive for the price of gold.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
That’s Why You Buy the Dips

That’s Why You Buy the Dips

Finance Press Release Finance Press Release 10.03.2021 14:41
Days like Tuesday (Mar. 9) are why you buy the dips. It was nothing short of a reverse rotation from what we’ve seen as of late. Bond yields moved lower; tech stocks popped.That’s why I called BUY on the Nasdaq.Inflation fears and the acceleration of bond yields are still a concern. But it looks as if things are stabilizing, at least for one day. The lesson here, though, is to be bold, a little contrarian, and block out the noise.Unless you’ve been living under a rock, you know that recent sessions have been characterized by accelerating bond yields driving a rotation out of high growth tech stocks into value and cyclical stocks that would benefit the most from an economic recovery. The Nasdaq touched correction territory twice in the last week and gave up its gains for the year.But imagine if you bought the dip as I recommended.The Nasdaq on Tuesday (Mar. 9) popped 3.7% for its best day since November. Cathie Wood’s Ark Innovation ETF (ARKK) surged more than 10% for its best day ever after tanking by over 30%. Semiconductors also rallied 6%.Other tech/growth names had themselves a day too: Tesla (TSLA) +20%, Nvidia (NVDA) +8%, Adobe (ADBE) +4.3%, Amazon +3.8%, Apple (AAPL) +4.1%, and Facebook (FB) +4.1%.In keeping with the theme of buying the dip, do you also know what happened a year ago yesterday to the date? The Dow tanked 7.8%!There’s no way to time the market correctly. If you bought the Dow mirroring SPDR DJIA ETF (DIA) last March 9, you’d have still seen two weeks of pain until the bottom. However, you’d have also seen a gain of almost 36% if you bought that dip and held on until now.Look, I get there are concerns and fears right now. The speed at which bond yields have risen is concerning, and the fact that another $1.9 trillion is about to be pumped into a reopening economy makes inflation a foregone conclusion. But let’s have a little perspective here.Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%.So is the downturn overblown and already finished?Time will tell. I think that we could still see some volatile movements over the next few weeks as bond yields stabilize and the market figures itself out. While I maintain that I do not foresee a crash like what we saw last March and feel that the wheels remain in motion for an excellent 2021, Mr. Market has to figure itself out.A correction of some sort is still very possible. I mean, the Nasdaq’s already hit correction territory twice in the last week and is still about 3-4% away from returning to one. But don’t fret. Corrections are healthy and normal market behavior. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).Most importantly, a correction right now would be an excellent buying opportunity. Just look at the Nasdaq Tuesday (Mar. 9).It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be cautious, but be a little bold too.You can never time the market.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- That’s Why I Called BUYFigure 1- Nasdaq Composite Index $COMPFor the second time in a week, the Nasdaq hit correction territory and rocketed out of it. It saw its best day since November and proved once again that with the Nasdaq, you always follow the RSI. There could be more uncertainty over the next few weeks as both the bond market and equity market figure themselves out. However, the Nasdaq declines were very buyable, as I predicted.If you bought the dip before Tuesday’s (Mar. 9) session, good on you. Be a little bit bold and fearless right now. Take Ark Funds guru Cathie Wood, for example. Many old school investors scoffed at her comments on Monday (Mar. 8) after she practically doubled down on her bullishness for her funds and the market as a whole. After crushing 2020, her Ark Innovation Fund (ARKK) tanked over 30%. Many called her the face of a bubble. Many laughed at her.Tuesday, March 9, ARKK saw its best day in history.I’m not saying that we’re out of the woods with tech. All I’m saying is don’t try to time the market, don’t get scared and have perspective.The Nasdaq is once again roughly flat for the year, its RSI is closer to oversold than overbought, and we’re still below the 50-day moving average, near a 2-month low, and right around support at 13000.It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.I think the key here is to “selectively buy.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.Mike Wilson , chief investment officer at Morgan Stanley, had this to say about recent tech slides- “I don’t think this is the end of the bull market or the end of tech stocks per se, but it was an adjustment that was very necessary.”I like the levels we’re at, and despite the possibility of more “adjustments” in the short-run, it’s a good time to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.For an ETF that attempts to correlate with the performance of the NASDAQ directly, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as when small-caps will be buyable, more thoughts on inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Stock Records Were Made to be Broken

Stock Records Were Made to be Broken

Finance Press Release Finance Press Release 12.03.2021 15:20
Records were made to be broken. Thursday's (Mar. 11) session was the embodiment of that.Every index closed in positive territory, and the Dow, S&P, and Russell all closed at record highs. Meanwhile, the Nasdaq led the way again with a 2.52% gain. After touching correction territory two times in the last week, the Nasdaq is up over 6.3% for the week. This is why you buy the dips, and why I said the second, the Nasdaq drops below 13000 support that you should buy.Be bold, a little contrarian, block out the noise, and never try to time the market. Sure, when you buy a dip during uncertain times, you run the risk of encountering more pain. However, in the long-term, stocks trend upwards.For example, do you also know what happened precisely a year ago, on March 11, 2020? The headline on CNBC read like so: Dow plunges 10% amid coronavirus fears for its worst day since the 1987 market. See for yourself.You know what else happened? The market didn't bottom for another 2 weeks and declined another 21%.However, if you bought the Dow-tracking DIA ETF on March 11 and held it this entire time, you'd have gained 40.51%.Imagine if you bought the dip as I recommended for tech.I cautiously said to BUY the QQQ ETF, which tracks the Nasdaq, on February 24 but recommended doing it cautiously and selectively. I doubled down once it dropped below support at 13000 and tripled down once the Nasdaq hovered around 12600 on Monday (Mar. 8).As I said before, the Nasdaq is up over 6.3% this week. If you followed my lead on this, you'd be pleased.Inflation fears and the acceleration of bond yields are still a concern. But let's have a little perspective here. It appears as if things have stabilized for now. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. Plus, jobless claims beat estimates again and came in at 712,000. This is nearly the lowest they've been in a whole year.We will see how President Biden's newly signed $1.9 trillion stimulus package affects yields and inflation. But for now, with the Fed showing no signs of hiking rates shortly and inflation looking tamer than expected, we could see more firepower for stocks.So is the downturn overblown and already finished?Time will tell. I think that we could still see some volatile movements and consolidation to close the week out. That's just what happens with surges and swings like this. While I maintain that I do not foresee a crash like what we saw last March and feel that the wheels remain in motion for an excellent 2021, Mr. Market still has to figure itself out.A broad-based correction of some sort is still very possible. I mean, the Nasdaq's already hit correction territory twice in the last week. Corrections are healthy and normal market behavior. Only twice in the previous 38 years have we had years WITHOUT a correction (1995 and 2017).Most importantly, a correction right now would be an excellent buying opportunity. Once again- look at the Nasdaq since March 8.It can be a very tricky time for investors right now. But never, ever, trade with emotion. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself.You can never time the market.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don't think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- That’s Why I Called BUYFigure 1- Nasdaq Composite Index $COMPCan I flex again, please?Flexing.The Nasdaq's performance this week is why I called BUY despite hitting two corrections in the last week. On Tuesday (Mar. 9), the Nasdaq saw its best day since November. The index's gains continued after that and is now sitting pretty up over 6.3% for the week.If you bought the dip, good on you. It's an excellent time to be a little bit bold and fearless. Take Ark Funds guru Cathie Wood, for example. Many old school investors scoffed at her comments on Monday (Mar. 8) after she practically doubled down on her bullishness for her funds and the market as a whole. After crushing 2020, her Ark Innovation Fund (ARKK) tanked over 30%. Many called her the face of a bubble. Many laughed at her. Tuesday, March 9, ARKK saw its best day in history. Week-to-date, ARKK is up a staggering 16.71%.I'm not saying that we're out of the woods with tech. But I am saying not to try and time the market, not get scared, and have some perspective.The Nasdaq is once again positive for the year, but unfortunately, I no longer think we're at a BUY level. We could see some consolidation and profit-taking to end the week. Still, if we see a significant drop, especially below 13000, it could be a good buy again. It can't hurt to keep nibbling- we're still off the highs. I'm going to stick with the theme of "selectively buying" sub-sectors such as cloud computing, e-commerce, and fintech.I think you should now HOLD and let the RSI guide your Nasdaq decisions. See what happens over subsequent sessions, research emerging tech sectors, and high-quality companies, and buy that next dip.For an ETF that attempts to correlate with the performance of the NASDAQ directly, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as when small-caps will be buyable, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Big Trading Week for Stock Markets

Big Trading Week for Stock Markets

Finance Press Release Finance Press Release 15.03.2021 14:51
Last week went a lot better than the week before. Especially if you’re a Nasdaq bull and bought the dip ( like I recommended Feb 24 ).The real story, though? We’ve still got the Dow, S&P, and Russell firmly at record highs.This week should be full of excitement for the indexes. Will we see more record highs? Will the Nasdaq catch up and recover? How will the newly signed $1.9 trillion “America Rescue Plan” impact the market? Will inflation fears and accelerating bond yields spook investors again?As you can see, there are clearly questions right now for stocks- despite the wheels in motion for pent-up consumer spending and a strong stock rally. Plus, we’ll start having many retail investors with an extra $1,400 to spend looking to have a little fun.Inflation fears and surging bond yields are still a concern and have caused significant volatility for growth stocks. But let’s have a little perspective here. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. Plus, jobless claims beat estimates again and came in at 712,000. This is nearly the lowest they’ve been in a whole year. Last week’s inflation data also came in more tamer than expected.So what should you pay attention to this week?More inflation data, jobless claims, and consumer sentiment will be released throughout the week, for one.But pay incredibly close attention to the Fed. Bonds still remain the market’s biggest wild card. With the Fed meeting Tuesday and Wednesday, bond yields could take their cue from what they say. No action is expected to be taken, and the Fed is expected to indicate more substantial growth. Fed officials are also not expected to alter their interest rate outlook and may stick to the plan of keeping rates this low through 2023.If this goes as expected, bond yields could potentially pop again, reinvigorating the rotation into value and cyclical plays and out of tech and growth plays.Time will tell what happens.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Is the Dow *Gulp* Overbought?Figure 1- Dow Jones Industrial Average $INDUNot much new to report on this. Except for that, it keeps ticking up towards overbought territory and hitting record highs. Year-to-date, we’re now up about 7.1%- almost double what the S&P and Nasdaq have done so far this year.It also managed to gain over 4% this past week.I don’t feel that we’re buyable at all right now. If you have exposure, HOLD and let it ride. Maybe start to consider taking some profits too.The index could greatly benefit from the stimulus package due to all of the cyclical stocks it holds. I can definitely foresee some pops in the index as investors digest the unprecedented amount of money being pumped into the economy, coupled with reopening excitement. But you can’t expect the index to keep going up like this and setting records every day. Plus, the RSI is almost 69 and showing overbought signs.So, where do we go from here?Many analysts believe the index could end the year at 35,000, and the wheels are in motion for a furious rally. But you could do better for a buyable entry point.From my end, I’d prefer to stay patient, assess the situation, and find better buying opportunities.My call on the Dow stays a HOLD, but we’re approaching SELL.For an ETF that aims to correlate with the Dow’s performance, the SPDR Dow Jones ETF (DIA) is a reliable option.For more of my thoughts on the market, such as tech, if small-caps are buyable, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Stock March Madness - Who you got?

Stock March Madness - Who you got?

Finance Press Release Finance Press Release 17.03.2021 14:42
Prepare yourself. March Madness could be here. No, I’m not talking about the college basketball tourney either.Stocks will be hanging onto Jay Powell’s every word and every breath on Wednesday (Mar. 17) and scrutinize his thoughts on interest rates and inflation.Pretty much, we’re the Fed’s hostages until this thing gets some clarity. Even if Powell says nothing, the markets will move. That’s just how it’s going to work.Rick Rieder, BlackRock’s CIO for global fixed income, echoed this statement. “I think the last press conference, I think I watched with one eye and listened with one ear. This one I’m going to be tuned in to every word and the markets are going to be tuned in to every word. If he says nothing, it will move markets. If he says a lot, it will move markets.”Jay Powell is the biggest market mover in the game now. What’s coronavirus anymore?So far, it’s been a relatively tame week for the indices. The Nasdaq’s continued playing catch-up and has outperformed, while the Dow and S&P are still hovering around record highs.The wheels are in motion for pent-up consumer spending and a strong stock rally. Plus, we have that $1.9 trillion stimulus package heating up the economy and an army of retail traders with an extra $1,400 to play with.Inflation fears and surging bond yields are still a concern and have caused significant volatility for growth stocks. But let’s have a little perspective here. Plus, jobless claims beat estimates again and came in at 712,000. This is nearly the lowest they’ve been in a whole year. Last week’s inflation data also came in more tamer than expected.But bonds yields still remain the market’s biggest wild card. Yes, yields are still at a historically low level, and the Fed Funds Rate remains 0%. But depending on how things go around 2 pm Wednesday (Mar. 17), yields could potentially pop again, reinvigorating the rotation into value and cyclical plays and out of tech and growth plays.Time will tell what happens.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Lessons LearnedFigure 1- iShares Russell 2000 ETF (IWM)The Russell 2000 was the biggest laggard on Tuesday (Mar. 16). I think I’m starting to figure this index out, though, for a solid entry point.I have been kicking myself for not calling BUY on the Russell after seeing a minor downturn when the markets got rocked in the second half of February. I may have broken my own rule about “not timing the market” also. I’ve wanted to buy the Russell 2000 badly forever but never thought it dipped hard enough (whenever it did). I was waiting for it to at least approach a correction.But I think I figured out a pattern now. Notice what happened with the Russell almost every time it touched or minorly declined below its 50-day moving average. It reversed. Look at the above chart. Excluding the large crash and subsequent recovery in late-March and April 2020, 5 out of the last 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Now, look at the index. As tracked by iShares Russell 2000 ETF (IWM) , its rally since November and year-to-date have been mind-blowing. Pretty much, this is the one reason why I’m more cautious about buying the index.Since the market’s close on October 30, the IWM has gained about 51.04% and more than doubled ETFs’ returns tracking the more major indices.Not to mention, year-to-date, it’s already up 19.12% and around at an all-time high.With that $1.9 trillion stimulus package set to greatly benefit small businesses, the Russell 2000 could pop even more.Unfortunately, I’m keeping this a HOLD. But I am monitoring the Russell 2000 closely.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for. The next time the index approaches its 50-day moving average, I will be a little more aggressive.For more of my thoughts on the market, such as tech, if small-caps are buyable, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Gold & the USDX: Correlations

Return of the Rising Yields

Finance Press Release Finance Press Release 19.03.2021 14:47
March Madness started on Thursday (Mar. 18), but stocks got the jump on their own brackets this week. Let’s dive in.Although Wednesday (Mar. 17) saw the indices have a nice St. Patrick’s day green reversal thanks to Jay Powell babying us on inflation thoughts again, Mr. Market isn't stupid. Manic, but not stupid. We saw a return to the strong rotation trend out of growth stocks the day after Powell's testimony (Mar. 18).Thursday (Mar. 18) saw bond yields surge to their highest levels in what seems like forever. The 10-year yield popped 11 basis points to 1.75% for the first time since January 2020, while the 30-year rate climbed 6 basis points and breached 2.5% for the first time since August 2019.Predictably, the Nasdaq tanked by over 3% for its worst session in 3-weeks.Jay Powell and bond yields are the most significant market movers in the game now. Get ready for the market next week when he testifies to Congress. That'll be a beauty. What's coronavirus anymore?So after what's been a relatively tame week for the indices, we can officially say bye-bye to that.Bond yields, though, are still at historically low levels, and the Fed Funds Rate remains at 0%. With the Fed forecasting a successful economic recovery this year, with GDP growth of around 6.5% -- the fastest in nearly four decades -- the wheels could be in motion for another round of the Roaring '20s.The problem, though, is that the Great Depression came right after the first Roaring '20s.Many are sounding the alarm. However, like CNBC's Jim Cramer, others think the current headwinds are overblown, and a mirror of the 2015-2016 downturn is based on similar catalysts.Figure 1: Jim Cramer TwitterCramer argued that Powell is a talented central banker willing to "let the economy continue to gain strength so that everyone has a chance to do well."Nobody can predict the future, and these growth stock jitters from rising bond yields may be overblown. But for now, it's probably best to let the market figure itself out and be mindful of the headwinds.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- Another Buyable Dip?Figure 2- Nasdaq Composite Index $COMPThe last time I switched my Nasdaq call to a BUY on Feb 24 , that worked out very well. I will use the same criteria again for the Nasdaq as the market figures out bond yields: The RSI and the 13000 support level. I need the Nasdaq’s RSI to dip below 40 while also falling below 13000 before buying.We’re not quite there. This is an excellent dip, but it’s really only one down day and its worst down day in weeks. I think we may have some more buying opportunities next week if bond yields pop due to Jay Powell’s testimony. I mean, it seemingly always happens after he speaks.Pay very close attention to the index and its swings.If the tech sector takes another big dip, don’t get scared, don’t time the market, monitor the trends I mentioned and look for selective buying opportunities. If we hit my buying criteria, selectively look into high-quality companies and emerging disruptive sub-sectors such as cloud computing, e-commerce, and fintech.HOLD, and let the RSI and 13000-support level guide your Nasdaq decisions. See what happens over subsequent sessions, research emerging tech sectors and high-quality companies, and consider buying that next big dip.For an ETF that attempts to correlate with the performance of the NASDAQ directly, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as a potentially overbought Dow Jones, small-caps, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
One Year From Stocks Bottom

One Year From Stocks Bottom

Finance Press Release Finance Press Release 24.03.2021 14:37
Next edition of this newsletter, we’re going to do a special on REITs. We will discuss which real estate sectors could see significant recovery after a brutal 2020.Which real estate sectors could be long-term solid bets? There are a few you might not be thinking of, and we will also discuss why REITs could be a great hedge against rising bond yields and inflation scares.Do you realize what Tuesday (Mar. 23) marked? One year since the market bottomed. Can you believe that it’s already been a year? Calling it a roller coaster is an understatement.One of the most crucial market concepts is that the market never looks back. It is a forward-looking instrument. Talking about the past as it relates to the market really doesn’t do anyone any good.However, after the year we’ve had, it’s essential to take a breath, reflect, and see what lessons we can learn from.Ethan Wolff-Mann, a Senior Writer for Yahoo! Finance, put out a great article, “ What we have learned in the 12 months since ‘the bottom ’” and discusses several key points:‘Every crisis is the same’Panic can hurt a portfolioYou genuinely don’t know what’s going to happenRebalancing comes out as a huge winnerAs we sit here a year later, we can finally see the light at the end of the tunnel. Vaccines are weeks away from being available to all adults over 16 in the U.S., while COVID numbers continue to drop. But we are still confronting the reality of a pandemic that is still raging in Europe and other parts of the world. Inflation signs are flashing, and unstable bond yields are scaring tech investors every few days. But keep the above lessons in mind.My personal biggest takeaway from the last year that I have applied since the several market downturns we’ve had thus far in 2021? Nobody can predict the future and never ever try to time the market. Many investors a year ago didn’t stick it out through the volatility and lost out. Some panic sold near the bottom and never bought back in.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:A year after we bottomed, there is optimism but signs of concern. The market has to figure itself out. More volatility is likely, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Time to Pounce?Figure 1- iShares Russell 2000 ETF (IWM)I kicked myself for not calling BUY on the Russell after seeing a minor downturn during the second half of February. I also realized I may have broken my own rule about “not timing the market.” I’ve wanted to buy the Russell 2000 forever but never thought it dipped hard enough (whenever it did). I was waiting for it to at least approach a correction.But once I looked at the iShares Russell 2000 ETF (IWM) chart, I had an epiphany. I noticed that almost every time it touched or minorly declined below its 50-day moving average, it reversed.The chart does not lie. Look at it above. Excluding the recovery in April from last year’s crash, 5 out of the previous 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Fast forward to Tuesday (Mar. 23). The Russell 2000 saw its worst day since February 25- and I loved every second of it. I felt almost similar to how I felt over the weekend during March Madness when I correctly called 13 seed Ohio to upset 4 seed defending NCAA champion Virginia. Finally, after weeks of waiting for a time to pounce on the Russell 2000 and missing golden opportunities, I think the time has come. We’re back right below its 50-day.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for.I’m finally switching this to a BUY.For more of my thoughts on the market, such as inflation fears and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Is Silver the New Gold?

Is Silver the New Gold?

Finance Press Release Finance Press Release 26.03.2021 14:30
Many analysts expect silver to outperform gold this year. It’s possible, but investors shouldn’t count on improving economic conditions and industrial demand.Silver has recently become a hot investment theme. For months, if not years, some analysts claimed that silver is undervalued relative to gold. Then, at the beginning of 2021, Reddit revolutionaries tried to trigger a short squeeze in silver. Although that attempt failed, silver has, so far, clearly been outperforming gold this year , as the chart below shows. So, is silver now a better investment than gold?Well, why would it be? After all, many investors buy silver for the same reasons that they purchase gold – it’s a rare, monetary metal which may be used as an inflation hedge , a safe-haven asset against tail risks , or a portfolio diversifier . It’s just cheaper than gold – and this is why it’s often called the poor man’s gold.Indeed, silver has a very high positive correlation with gold . Just take a look at the chart below, which illustrates the movement of gold and silver prices since April 1968. The shapes of the lines are very similar and the correlation coefficient is as high as 0.90!On the other hand, silver may indeed outperform gold. After all, silver has a dual nature. It is not only a monetary asset – like gold – but also an industrial commodity. This implies that silver is more business cycle -sensitive than gold. Therefore, given that the global economy is recovering from the deep recession caused by the coronavirus pandemic and the Great Lockdown , silver may outperform gold. In other words, although both gold and silver could benefit from reflation during the recovery, improving economic conditions could support the latter metal more .Another argument for silver shining brighter than gold in 2021 is the historical pattern according to which silver prices tend to follow gold prices with some lag, just to catch up with them later – often overreacting compared with gold’s behavior.So much for theory. Let’s move on to the data now and analyze the previous economic crisis , i.e., the Great Recession , and the following recovery. As the chart below shows, both metals moved generally in tandem, however, silver was more volatile than gold .For example, from its local bottom in mid-2007 to its local peak in early 2008, silver rose 79 percent, while gold “only” 57 percent. Then, in the first phase of the global financial crisis , silver plunged 58 percent (from $20.92 to $8.88), while gold slid 30 percent (from $1011.25 to $712.5). Subsequently, silver skyrocketed 448 percent, reaching a peak of $48.7 in April 2011. Meanwhile, the price of gold reached its peak of $1875 a little bit later, in September 2011, gaining 166 percent. Finally, silver plunged 46 percent by the end of 2011, while gold dropped only 19 percent. This shows that the economic recovery and industrial revival that followed the Great Recession didn’t help silver to shine. Actually, the bluish metal underperformed gold .Similarly, silver plunged more than gold (25 versus 17 percent) in the run-up to the burst of the dot-com bubble , as one can see in the chart below. It also gained less than gold in the aftermath of the 2001 recession (25.4 versus 27.5 percent), and then it plunged in the third quarter of 2002, significantly underperforming gold.Therefore, the recent history doesn’t confirm the view that silver should be outperforming gold in the early stages of a recovery, because it’s an industrial commodity that benefits from improving economic conditions. Silver was never in a bullish mode when gold was in a bear market, and it rather tends to rally rapidly in the late stage of the commodity cycle, like in the 2000s.Actually, one can argue that silver has the best period behind itself. After all, it soared 141 percent from late March to September 2020, while gold rallied “only” 40 percent. So, it might be the case that the catch-up period, in which silver outperforms gold, is already behind us. Indeed, as the chart below shows, the gold-to-silver ratio has recently declined to a more traditional range of 60-70.This, of course, doesn’t mean that silver cannot rise further. However, it seems that the metal has already caught up somewhat with its more precious cousin . So, it’s possible that silver can outperform gold in 2021, as Biden’s focus on renewable energy may help silver – as a major part of the metal used in industry is now linked to solar panels and electronics, but history teaches us that investors shouldn’t count on industrial demand . Silver didn’t outperform gold during recoveries from the previous recessions. Although silver has a dual nature, its price is highly correlated with gold prices. Therefore, macroeconomic factors, such as the U.S. dollar , real interest rates , risk appetite, inflation , public debt , monetary policy , fiscal policy , etc., should have a stronger impact on silver than industrial demand . As always, those entering the silver market should remember that silver price movements are more violent than in the gold market.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
The Three Pillars for Stocks

The Three Pillars for Stocks

Finance Press Release Finance Press Release 29.03.2021 16:42
We’re officially almost through with the first quarter of 2021. While a broad correction did not happen by now, as I thought, the Nasdaq dipped into correction territory twice.There might also be as much uncertainty for tech stocks today as there was at March’s start.However, let’s look at the big picture almost a week after we hit the 1-year anniversary of the market’s bottom. Three pillars remain in motion as a strong backdrop for stocks:VaccinesDovish monetary policy full of stimulusFinancial aidWhile the major indices are still positive for 2021, every month this year has been marked by hot starts, marred by mid-month uncertainty and downturns. We’re dealing with rising bond yields, inflation scares, volatile Reddit trades, and an improving yet slowing labor market recovery.Plus, although earnings came in strong this past quarter, stock valuations are still at an overly inflated point not seen in years. In fact, Ray Dalio , founder of the world’s largest hedge fund, Bridgewater Associates, says there’s a bubble that’s ‘halfway’ to the magnitude of 1929 or 2000.We could see some more volatility on tap this week as the market continues to figure itself out.Suez Canal- There’s been a gigantic tanker blocking arguably one of the most crucial waterways for global trade for the last 6 days. There are indications that the tanker may be on the way to being freed. But the sooner this happens, the better. The Suez Cana controls about 10% of global trade, so you can only imagine the hundreds of billions of dollars bleeding per day the more this drags on.Economic Data- Consumer Confidence, the March job’s report, the unemployment rate, and the PMI Manufacturing index will be released this week.Earnings- Chewy (CHWY) will report Tuesday (Mar. 30) after market close, and Walgreens Boots Alliance (WBA), Dave & Busters (PLAY), Micron (MU) will all report after market close Wednesday (Mar. 31).My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:Over a year after we bottomed, there is optimism but signs of concern.The market has to figure itself out. More volatility is likely, and we could experience more muted gains than what we’ve known over the last year. Inflation and interest-rate worries should be the primary tailwind. However, a decline above ~20%, leading to a bear market, appears unlikely to happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Time to Pounce?Figure 1- iShares Russell 2000 ETF (IWM)I kicked myself for not calling BUY on the Russell after seeing a minor downturn during the second half of February. I wasn’t going to make that mistake again.After the iShares Russell 2000 ETF (IWM) went on its latest rally to start March, I checked out the chart. I noticed that almost every time it touched or minorly declined below its 50-day moving average, it reversed.Excluding the recovery in April from last year’s crash, 5 out of the previous 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Fast forward to Tuesday (Mar. 23). The Russell 2000 saw its worst day since February 25, dropped below its 50-day, and I switched the call to a BUY.Now, as we start the final week in March, we may be looking at the 6th reversal after dipping below its 50-day. The IWM has been up about 4.25% since March 24.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for.Based on the RSI and where we are in relation to the 50-day moving average, I still feel that this is a BUY.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Tax Hikes are Coming

Tax Hikes are Coming

Finance Press Release Finance Press Release 31.03.2021 15:54
End of the month and first quarter of 2021. Is time going fast or slow? Markets have been moving at a dizzying pace to start the year.As a side note, this will be our last newsletter for this week because the market is closed on Friday (Apr. 2).The first quarter of 2021 is officially almost finished. Time flies when you’re having fun, right? While a broad correction did not happen by now, as I expected, the Nasdaq did enter correction territory twice since February. Despite the Nasdaq’s muted moves on Tuesday (Mar. 30), it’s right on the edge of its third foray into correction territory.The market themes remain. There is still as much uncertainty for tech stocks today as there were at the start of March. Until there’s some clarity on inflation and bond yields, I can’t foresee this ending anytime soon.Consider this too. President Biden is about to unveil a $2 trillion infrastructure plan during Wednesday’s session (wasn’t it supposed to be $3 trillion?). While this is great for America’s crumbling infrastructure, let’s be honest- does this economy, while recovering, need anymore spending?Plus, how do you think he will pay for this? Hiking taxes- namely corporate taxes . Those gains that high growth stocks saw after Trump cut corporate taxes in 2017 could very well go away. The market may have priced in a lot of optimism. It may have already priced in some pessimism from potential inflation. But one thing it has not priced in is a possible tax hike.This concerns me.Rising bond yields + Rising taxes= A double whammy of bad news for tech stocks.However, despite the “what ifs,” for now, three pillars remain in motion as a strong backdrop for stocks:VaccinesDovish monetary policy full of stimulusFinancial aidMy goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:The market has to figure itself out.More volatility is likely, and we could experience more muted gains than what we’ve come to know over the last year. Inflation, interest-rate worries, and the potential for tax hikes should be the primary tailwinds. However, a decline above ~20%, leading to a bear market, appears unlikely for now.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Time to Pounce?Figure 1- iShares Russell 2000 ETF (IWM)The climate right now supports the Russell 2000. The current economic policy is tailor-made for small-caps. The best part, though? The Russell is still very buyable.I kicked myself for not calling BUY on the Russell after it saw a minor downturn during the second half of February. I wasn’t going to make that mistake again.After the iShares Russell 2000 ETF (IWM) went on its latest rally to start March, I checked out the chart. I noticed that almost every time it touched or minorly declined below its 50-day moving average, it reversed.Excluding the recovery in April from last year’s crash, 5 out of the previous 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Fast forward to Tuesday (Mar. 23). The Russell 2000 saw its worst day since February 25, dropped below its 50-day, and I switched the call to a BUY.Now, as we start the final week in March, we may be looking at the 6th reversal after dipping below its 50-day. The IWM has been up about 3% since March 24.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for.Consider this too. The Russell is on track for its first losing month in almost five months. According to the chart, it may have also found double-bottom support.Based on macro-level tailwinds, its first losing month in five, potentially finding double-bottom support, its RSI, and where it is in relation to the 50-day moving average, I feel that this is a solid time to BUY.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
On the Verge of Stocks Pullback

On the Verge of Stocks Pullback

Monica Kingsley Monica Kingsley 07.04.2021 15:51
S&P 500 is still consolidating Monday‘s sharp gains, showered with liquidity. Yet it seems that eking out further gains is getting harder as the price action took the index quite far from its key moving averages. If I had to pick one sign of stiffer headwinds ahead, it would be the tech sector‘s reaction to another daily retreat in Treasury yields – the sector didn‘t rally, and neither did the Dow Jones Industrial Average. Value stocks saved the day, and it appears we‘re about to see them start doing better again, relatively speaking.Yes, the risk-reward ratio for the bulls is at unsavory levels in the short run. What about being short at this moment then? It all depends upon the trading style, risk tolerance and time horizon. I‘m not looking for stocks making a major top here as the bull run is intact thanks to:(..) Well, liquidity and bets on the stocks benefiting from the coming infrastructure bill. Any way you look at it, the market breadth is positive and ready to support the coming upswing continuation, even though I look for a largely sideways day in stocks on Tuesday given the aptly called fireworks to happen yesterday. Sizable long profits in stock market trades #6 and #7 have been taken off the table – 149 points in my Standard money managements, and 145 points in the Advanced money management that comes on top.My prognosis for yesterday‘s session materialized, and we have seen quite a record number (around 95%) of stocks trading above their 200-day moving averages, which is similar to the setup right after the post-dotcom bubble bear market 2002/3 lows, or 1-2 years after the bull market run off the Mar 2009 lows. Hard to say which one is more hated, but I see the run from Mar 2020 generational low as the gold medal winner, especially given the denial accompanying it since.Gold made a run above $1,740 in line with retreating yields and copper not giving up much gained ground, but the immediate run‘s continuation to the key $1,760s or even better above $1,775 looks set to have to wait for a few sessions. I don‘t expect today‘s FOMC minutes release to change that. While the metals are likely to take their time, the healthy miners‘ outperformance supports its continuation once the soft patch we appear entering, is over.The Thursday called dollar downswing is playing out, putting a floor below the commodities, which are undergoing a much needed correction from their late Feb top. It‘s not over yet, and the shy AUD/USD upswing is but one clue. Given the oil price meandering around $60 (by the way, not even the unlikely decline to $52 would break black gold‘s bull run), the USD/CAD performance as of late is disappointing, as the greenback got mostly stronger since mid Mar. More patience in the commodities arena appears probable as we‘re waiting for both Treasury yields and inflation expectations to start rising again.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe SPX headwinds are readily apparent, and a brief pullback would be healthy. Don‘t look though for too much downside.Russell 2000 and Emerging MarketsSmallcaps are still underperforming for now, but emerging markets scored gains thanks to improving yield differentials and another down day in the world reserve currency.Focus on TechnologyTech (XLK ETF) was the key retreating sector yesterday – little wonder the mid Feb resistance it‘s approaching. The big names ($NYFANG, black line) are lagging behind still, showing that the sector got a little ahead of itself on a short-term basis.Gold and SilverGold‘s Force index finally crossed into positive territory, but the yellow metal isn‘t taking yet advantage of retreating yields in a visually outstanding way. Quite some resistance in the $1,740s needs to be cleared first, which would likely take a while, but the rally‘s internals are still on the bulls‘ side.Gold miners keep strongly outperforming the yellow metal, with the seniors (GDX ETF) doing particularly great – better than gold juniors or silver miners. Seeing signs of the silver sector getting too ahead, wouldn‘t likely be bullish at all unless sustained – at the current stage, I can‘t underline these words enough in the ongoing physical silver squeeze.Gold to Silver RatiosSince the gold bottom was hit in early Mar (that‘s still the leading hypothesis), the precious metals‘ leadership has moved to the yellow metal – and it‘s visible in both the gold to silver ratio and gold miners to silver miners one. The time for the white metal to (out)shine would come, but clearly isn‘t and won‘t be here any day now.SummaryS&P 500 is likely to keep consolidating gained ground, and (shallow) bear raids wouldn‘t be unexpected here – in spite of solid corporate credit markets performance. Yet, it‘s the extraordinary nature of VIX trading and put/call ratio moves, that point to the bull market run as intact and merely in need of a breather.Precious metals are likely to run into short-term headwinds before clearing out the next major set of resistances above $1,760s. The upswing though remains healthy and progressing, and will be led by the gold sector.
Navigating the Tidal Wave of Liquidity

Navigating the Tidal Wave of Liquidity

Monica Kingsley Monica Kingsley 08.04.2021 15:50
S&P 500 moved marginally higher in spite of its short-term very extended position, powered by liquidity and almost defying the odds. Credit markets were hinting at deterioration, the yen carry trade I talked a week ago has run into a brick wall as viewed by the USD/JPY exchange rate reversal – but stocks didn‘t listen, and their market breadth indicators are actually quite healthy.We‘re still in the rare constellation I discussed two days ago – Treasury yield moves are exerting no real pressure either on value stocks or technology including heavyweights, which are picking up the tech upswing slack. Microrotations still pointing higher are the name of the game, on the wave of infrastructure bill expectations as well.Still, the risk-reward ratio for the bulls is at unsavory levels in the very short run even as the longer time frame perspectives remain really bright. Consider these points made yesterday:(…) we have seen quite a record number (around 95%) of stocks trading above their 200-day moving averages, which is similar to the setup right after the post-dotcom bubble bear market 2002/3 lows, or 1-2 years after the bull market run off the Mar 2009 lows. Hard to say which one is more hated, but I see the run from Mar 2020 generational low as the gold medal winner, especially given the denial accompanying it since.Gold kept its run above $1,740 intact and regardless of the daily weakness in the miners – should that one be repeated more consistently, it would become worrying for the bulls. Looking though again at the USD/JPY chart, I‘m increasingly optimistic that the currents working against the king of metals, have turned. That‘s because whenever yen, the currency perceived by the market place as a safe haven one, strengthens, gold tends to follow its cue – and that‘s where we are now. The precious metals run to the key $1,760s or even better above $1,775 is approaching, and has already sent my open gold position solidly into the black. The soft patch I cautioned against at the onset of yesterday‘s session, has materialized in the miners, and might be very well over by today‘s closing bell. Yes, I look for mining stocks to reverse yesterday‘s weakness even in the competition for money flows with the S&P 500 holding up gained ground.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookS&P 500 keeps hugging the upper border of Bollinger Bands, and the willingness to trade at these extended levels, has decreased as the volume shows. Long-term investors correctly perceive higher highs as coming, short-term ones view the entry point as unfavorable.Credit MarketsBond markets wavered yesterday – both corporate and Treasury ones. Yet, note the turn higher in both high yield corporate bonds and investment grade ones, defying TLT – this bodes well for the stock market upswing health.Focus on Technology and ValueTech (XLK ETF) reversed its Tuesday‘s retreat, and $NYFANG (lower black line) powered upwards while value stocks (upper black line) or Dow Jones Industrial Average didn‘t yield an inch. The advance is broad-based but tech heavyweights might take a moment in overcoming their mid-Mar highs.Inflation ExpectationsThe Treasury inflation protected securities to long-dated Treasuries (TIP:TLT) ratio appears ready to move upwards, and the rising yields are clearly doubting its recent dip.Gold in the SpotlightGold miners compared to gold, don‘t paint a daily picture of strength. Jumping to conclusions on account of the hanging man formation in gold, would be premature though.Zooming out, the weekly gold chart with overlaid copper to 10-year Treasury yield, paints a picture of (bullish) turnaround and decoupling. Gold has been clearly attempting to move higher lately, and that will reflect upon the precious metals complex positively as it undergoes its own rotations lifting gold, silver or miners at different stages and magnitudes.SummaryS&P 500 is likely to keep consolidating gained ground, and (shallow) bear raids wouldn‘t be unexpected here – in spite of the strong market breadth. We‘re witnessing VIX trading well below 20 for four sessions in a row while the put/call ratio has risen to the approximate midpoint of its usual range – the bull market is intact, and a breather wouldn‘t be surprising here.Miners moving higher again is the first step to power gold upwards sustainably again, but the shifting currency winds would help here as strengthening yen would facilitate beating the next major set of resistances above $1,760s.
Stocks are Heating Up

Stocks are Heating Up

Finance Press Release Finance Press Release 09.04.2021 15:40
In keeping with its historical performance, April has started off white-hot. We ended March, and Q1 for that matter, with more questions than answers.But April 2021 started with a blowout jobs report, and the indices haven't looked back since. Right now, the S&P 500 is at yet another record, the Dow is just about at a record, and we've seen a furious comeback for Big Tech and growth stocks.The sentiment is certainly better now than it was just a couple of weeks ago. However, I implore you to remember that every month in 2021 thus far has started off hot and saw a pullback/volatility occur in the second half of the month.Think about it. In January, we had the GameStop trade spooking investors. In February and March, we had surging bond yields, inflation fears, or Jay Powell comments that rubbed people the wrong way. These concerns won't just disappear because we want them to. If we could make things magically disappear, COVID would've been over yesterday.But, as I mentioned before, April historically is a strong month for stocks. According to Ryan Detrick , chief market strategist at LPL Financial, "Other than my Cincinnati Bengals breaking my heart, few things are more consistent than stocks higher in April."During April, the S&P 500 has gained in 14 of the past 15 years. April has also been the strongest month for stocks over the past 20 years.The market concerns, though, are still intact. We still have to worry about inflation, bond yields, and stocks peaking. According to Binky Chadha , Deutsche Bank's chief U.S. equity strategist, we could see a significant pullback between 6% and 10% over the next three months.Another thing I'm a bit concerned about is the $2 trillion infrastructure plan. While this is great for America's crumbling infrastructure, do we really need to spend any more trillions?Plus, how do you think this will be paid for? Hiking taxes- namely corporate taxes . Those gains that high growth stocks saw after Trump cut corporate taxes in 2017 could very well go away. While President Biden has indicated a willingness to negotiate his 28% corporate tax proposal, it's still a tax hike.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:We're hot right now.However, we could see more volatility and more muted gains than what we've come to know over the last year.April is historically strong, but please continue to monitor inflation, yields, and potential tax hikes. Be optimistic but realistic. A decline above ~20%, leading to a bear market, appears unlikely. Yet, we could eventually see a minor pullback by the summer, as Deutsche Bank said.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Still Buyable?Figure 1- iShares Russell 2000 ETF (IWM)I proudly switched my call on the iShares Russell 2000 ETF (IWM) to a BUY on March 24. I kicked myself for not calling BUY on the Russell after seeing a minor downturn during the second half of February and swore I wouldn’t make that mistake again.We’re up to over 5% since then.The climate right now supports the Russell 2000. The current economic policy is tailor-made for small-caps. The best part, though? The Russell is still very buyable.The RSI is still hovering around 50. I also checked out the chart and noticed that almost every time the IWM touched or minorly declined below its 50-day moving average, it reversed.Excluding the recovery in April from last year’s crash, 5 out of the previous 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Fast forward to now. The Russell 2000, despite its gains since tanking on March 23, remains right at about its 50-day moving average.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for.According to the chart, we may have found double-bottom support too.Based on the chart and macro-level tailwinds, I feel that you can still BUY this index. In fact, it may be the most buyable of them all.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Earnings Season’s Hot Start

Earnings Season’s Hot Start

Finance Press Release Finance Press Release 16.04.2021 15:42
“Other than my Cincinnati Bengals breaking my heart, few things are more consistent than stocks higher in April.”As a stock nerd and NFL fan, I love this quote from Ryan Detrick , the chief market strategist at LPL Financial.Historically in April, the S&P 500 has seen gains in 14 of the past 15 years. April has also been the strongest month for stocks over the past 20 years.April 2021 has been no exception. Although March, and Q1, for that matter, ended with more questions than answers, this month has been nothing but white-hot.The month kicked off with a blowout jobs report. It then continued with two consecutive weeks of jobless claims crushing estimates, retail sales coming in almost ⅓ higher than projected, and bank earnings blowing past forecasts. The Dow Jones and S&P 500 seemingly hit fresh record-highs every other day, and despite complications with JnJ’s one-dose vaccine, all signs point towards our life returning to normal by this summer.While optimism is high right now, I implore you to remain cautious. I’m really not sure how much higher the Dow and S&P can go without pulling back somewhat. Not to mention, it still has not been smooth sailing for Cathie Wood stocks or SPACs for the last two months either. This rotation into recovery names is very real.Remember that every month in 2021 thus far has started off hot and saw a pullback and volatility occur by the second half of the month.We are now officially in the latter half of April. Although, as I said, April is historically a strong performing month, think about this. By the second half of January, we had Reddit trades spooking investors. In February and March, we had surging bond yields, inflation fears, or Jay Powell comments that rubbed people the wrong way. These concerns won’t just disappear because we want them to. If we could make things magically disappear, COVID would’ve been over yesterday.According to Binky Chadha , Deutsche Bank’s chief U.S. equity strategist, we could see a significant pullback between 6% and 10% over the next three months because of potentially full valuations and inflation fears. Even if this $2 trillion infrastructure plan doesn’t pass in full, do we really need to spend any more trillions with an economy starting to turn red hot?Plus, how do you think this will be paid for? Hiking taxes- namely corporate taxes . Those gains that high growth stocks saw after Trump cut corporate taxes in 2017 could very well go away. While President Biden has indicated a willingness to negotiate his 28% corporate tax proposal, it’s still a tax hike.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:We’re hot right now.However, we could see more volatility and more muted gains than what we’ve come to know over the last year.April is historically strong, but please monitor overvaluation, inflation, bond yields, and potential tax hikes. Be optimistic but realistic. A decline above ~20%, leading to a bear market, appears unlikely. Yet, we could eventually see a minor pullback by the summer, as Deutsche Bank said.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. The Dow Jones- How Much Higher Could We Go?Figure 1- Dow Jones Industrial Average $INDUThe Dow Jones remains red hot in 2021. Strong bank earnings, a recovering economy, and the potential for further infrastructure spending have sent the index to record highs in what seems to be every other day. Unfortunately, we are nowhere close to buyable any longer and are firmly overbought with an RSI over 72.For the longest time, I’ve said to HOLD the Dow and let the gains ride. Now, I think it’s an excellent time to trim and take profits. Many analysts believe the index could end the year at 35,000 or higher, and the wheels are still in motion for that to happen. The problem, though? We’re above 34,000, and we’re only in mid-April.You could do a heck of a lot better for a buyable entry point.Having Dow exposure is valuable. The index has many strong recovery cyclical plays that should benefit from what appears to be an economic recovery and reopening going even better than expected. The Dow could also be quite beneficial as a hedge against volatile growth stocks and SPACs. You won’t see bond yields spooking this index as much.But at this level, it’s probably better to SELL and consider trimming profits.For an ETF that aims to correlate with the Dow’s performance, the SPDR Dow Jones ETF (DIA) is a great option.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Those Tax Hikes I Warned About..

Those Tax Hikes I Warned About..

Finance Press Release Finance Press Release 23.04.2021 15:57
Remember how every month in 2021 started off hot and then saw a pullback and volatility occur by the second half of the month? Welcome to the second half of April.After switching my calls on the SPDR S&P ETF (SPY) and the SPDR Dow Jones ETF (DIA) a week ago (Apr. 16), both have declined over 1% and are on track for their first losing weeks in more than a month.Despite the month’s promising start with blowout jobs reports, stronger-than-expected earnings, the lowest jobless claims in months, and more, remember how I said to stay vigilant on inflation and potential tax hikes?Well, the market on Thursday (Apr. 22) tanked thanks to rumblings that President Biden could hike the capital gains tax rate for those earning over $1 million. This isn’t just some ordinary tax hike either. Biden would essentially double the current tax rate of 20% to 39.6% for those wealthy investors and hike it as high as 43.4% for the richest of the rich.Not to mention President Biden has been talking for weeks about hiking corporate taxes to 28%.Tax the rich? Guess Mr. President has to fund his spending sprees somehow, no?Although April historically has been the strongest month for stocks over the past 20 years, with the S&P 500 witnessing gains in 14 of the past 15 years, not everything is smooth sailing right now. Especially if you’re a SPAC or a speculative sector.In fact, for the broader market, I’d even caution that we may be at or around a peak, with most of the good news priced in already. Despite what’s been a rough week, the Dow and S&P are still at historically high levels. According to Binky Chadha , Deutsche Bank’s chief U.S. equity strategist, we could see a significant pullback between 6% and 10% over the next three months because of potentially full valuations and inflation fears.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:We could see more volatility and more muted gains than what we’ve come to know over the last year.April is historically strong, but please monitor overvaluation, inflation, bond yields, and potential tax hikes. Be optimistic but realistic. A decline above ~20%, leading to a bear market, appears unlikely. Yet, we could eventually see a minor pullback by the summer, as Deutsche Bank said.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Is the S&P Still Too Frothy?Figure 1- S&P 500 Large Cap Index $SPXOn the one hand, according to Sanford C. Bernstein strategists, the S&P 500 index could double by the end of the decade and reach 8,000.Historically, we could really be at a strong entry point for the long-term too. Over two weeks ago, we marked the first anniversary of this bull market. Historically, S&P 500 bull markets since 1957 on average resulted in price gains of 179% and lasted an average of 5.8 years.Because the S&P 500 has risen just about 84.81% since March 23, 2020, if history tells us anything, we may just be getting started.Furthermore, earnings season is off to a roaring start, with companies crushing estimates. There’s no reason to believe this will end either. Not to mention, it’s April, historically the strongest month for stocks.On the other hand, despite this week’s minor pullback, the S&P 500 continues to hover around record highs as it approaches 4200 for the first time in its history. It’s also potentially historically overvalued. I’m more worried about valuations than I am excited about earnings.Also, I’m not pleased about potential tax hikes for this frothy market.I don’t see this as a buyable index at the moment. While it’s not quite as frothy as it was a week ago and more of a HOLD as of April 23, 2021, if it pops anymore, it could be more sellable. I’d prefer a deeper pullback.HOLD. The S&P has skyrocketed to unprecedented levels and valuations, but strong earnings could give the index some momentum. For an ETF that attempts to directly correlate with the performance of the S&P 500, the S&P 500 SPDR ETF (SPY) is a great option.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
No Upsetting the Apple Cart in Stocks or Gold

No Upsetting the Apple Cart in Stocks or Gold

Monica Kingsley Monica Kingsley 26.04.2021 15:35
The tax hike proposal shock is over, and S&P 500 took again on the ATHs on Friday. Buying pressure throughout the day lasted almost till the closing bell, and is likely to continue this week as well. And why shouldn‘t it – has anything changed? The artificial selling any capital gains tax hike would generate, is likely to come before year end – not now:(…) Look still though how little has changed, as if the tax raising plans haven‘t been around since the infrastructure bill or implicitly even before. It‘s still April, and markets are pricing in not only this select reality, but broader tax increases coming. Yes, they have woken up, and the reflation paradigm is getting an unwelcome companion. This hit won‘t bring down the bull, but will slow it down – and the implications for broader economy will only hasten the pronounced advent of the commodities supercycle (well underway since the corona deflationary crash last year). The move towards risk-on was clearly there, overpowering the USD bulls yet again as the dollar bear market has reasserted itself. It‘s not just about EUR/USD on the way to its late Feb highs, but about the USD/JPY too – the yen carry trade is facing headwinds these days, acting as a supportive factor for gold prices. While these went through a daily correction, commodities pretty much didn‘t – lumber is powering to new highs, agrifoods didn‘t have a down day in April, copper and oil scored respectable gains. The market is in a higher inflation environment already, and it will become increasingly apparent that commodity-led inflation is here to stay.Back to stocks and bonds, the S&P 500 took well to a daily rise in Treasury yields – and that‘s the key factor overall. The turnaround was most clearly seen in tech heavyweights but defensive sectors such as consumer staples or utilities didn‘t do well (they‘re interest rate sensitive, after all), and Dow Jones Industrial Average traded closer to the optimistic side of the spectrum. The second piece of the puzzle came from value stocks and financials, which are working to put an end to their own shallow correction – just as you would expect when rates take a turn higher.So, another volatility spike has been banished, but option traders aren‘t yet satisfied, and keep piling into protective instruments. I view this as a fuel of the upcoming rally continuation, unless the tech‘s earnings batch doesn‘t disappoint as Netflix subscriber base growth did.One more argument in favor of the S&P 500 upswing, comes from the smallcaps – the time of their outperformance, is approaching. Likewise emerging markets are starting to do better, and the dollar effect is part of the explanation.Gold took sensitively to the rise in yields, and retreating dollar didn‘t lift it up really. The yellow metal disregarded proportional increase in inflation expectations, and so did the miners – indicating that a brief soft patch in the precious metals sector can‘t be excluded. This doesn‘t change my Friday‘s thoughts that:(…) The precious metals upleg has started, we‘re in a real assets super bull market, and this little hiccup won‘t derail it. The sad implication would actually drive it as capital formation would be hampered, unproductive behaviors encouraged, and potential output lowered. Pretty serious consequences – add to which inflation as that‘s what the Fed ultimately wants, and the recipe for more people falling into higher tax brackets through illusory gains, is set. Then, as inflation starts firing on all cylinders – a 2022-3 story when the job market starts overheating – the pain would be felt more keenly. Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookIt‘s not an issue that the two latest upswings happened on decreasing volume as I view the preceding modest volume spike as a sign of weak selling turning into accumulation. There is plenty of doubt to drive further S&P 500 gains.Credit MarketsBoth high yield corporate bonds to short-term Treasuries (HYG ETF) and investment grade ones (LQD ETF) have risen on Friday, and the divergence to long-dated Treasuries is another key factor driving the risk-on return conclusion.Technology and FinancialsThe $NYFANG strength was the key deciding factor in the S&P 500 upswing, and value stocks didn‘t stand in the way much either. Financials joined in the upswing by tech are a sign of the shallow correction drawing to its end.Gold & Miners WeeklyCompare this chart to the one that I published on Thursday – the red candle smacking of reversal is actually just an initial rejection in my view. It‘ll take a while to return back above the 50-day moving average, but that‘s a question of time merely. Gold miners are still outperforming, and the upside momentum in the gold sector merely paused. We may see a brief pullback as the bears try their luck, but it will be only a temporary setback – there is no telling weakness in any of the markets I am looking at that would indicate otherwise.Gold, Silver and Key RatioThe copper to 10-year Treasury yield ratio shows that the markets aren‘t buying the transitory inflation story – the rush into commodities goes on, and justifiably so. Just look how much silver has been resilient, and the white metal is uniquely positioned to benefit both from the economic recovery, forced shift into green economy, and building monetary pressures.Seniors vs. JuniorsThroughout the 10+month long correction, juniors had been the more resilient ones, but it was the seniors that I called to lead gold out of the bottom. And they did, meaning that juniors had underperformed over the coming month clearly. Once animal spirits return even more to the precious metals sector, their outperformance is likely to return as the market appetite for ounces in the ground grows. We aren‘t there yet, but the new upleg is well underway.SummaryThe S&P 500 turned around convincingly, and new highs are a question of a rather short amount of time – be prepared though for headline risks should we get an (unlikely) earnings disappointment.Gold and miners are in consolidation mode as they failed to take advantage of plunging dollar and rising commodity prices, but the precious metals sector is likely to play a catch up relative to commodities as its sluggish post Aug performance would get inevitably forgotten.
The Inflation Tsunami About to Hit

The Inflation Tsunami About to Hit

Monica Kingsley Monica Kingsley 27.04.2021 15:59
Stocks went on to push higher yesterday – the pressure is building. Trends in place since last week, remain in place for this earnings rich one too. Reflation still rules, reopening trades are well underway, and inflation expectations are modestly turning up again without putting too much strain on the Treasury markets.While Monday wasn‘t an example of a risk-on day, the markets are clearly moving there:(…) overpowering the USD bulls yet again as the dollar bear market has reasserted itself. It‘s not just about EUR/USD on the way to its late Feb highs, but about the USD/JPY too – the yen carry trade is facing headwinds these days, acting as a supportive factor for gold prices. While these went through a daily correction, commodities pretty much didn‘t – lumber is powering to new highs, agrifoods didn‘t have a down day in April, copper and oil scored respectable gains. The market is in a higher inflation environment already, and it will become increasingly apparent that commodity-led inflation is here to stay.Yesterday was a great day for commodities again as these scored stronger gains than tech or $NYFANG, the main winners within the S&P 500 (defensives took it on the chin – seems like we‘re about to see rates move higher again). Anyway, VIX didn‘t object as options traders piled into the clearly complacent end of the spectrum again. Both the Russell 2000 and emerging markets loved that – the best days for smallcaps are clearly ahead:(…) the time of their outperformance, is approaching.Gold miners didn‘t outperform the yellow metal yesterday while silver did – are the ingredients for a metals‘ top in place? I don‘t think so, and have actually called out on Twitter the GDX downswing as likely to be rejected and ending with a noticeable lower knot. And here we are. No changes to my Friday‘s thoughts that:(…) The precious metals upleg has started, we‘re in a real assets super bull market, and this little hiccup won‘t derail it. The sad implication would actually drive it as capital formation would be hampered, unproductive behaviors encouraged, and potential output lowered. Pretty serious consequences – add to which inflation as that‘s what the Fed ultimately wants, and the recipe for more people falling into higher tax brackets through illusory gains, is set. Then, as inflation starts firing on all cylinders – a 2022-3 story when the job market starts overheating – the pain would be felt more keenly. When even Larry Summers starts talking the dangers of an inflationary wave, things are really likely getting serious down the road. On a side note, my tomorrow‘s analysis will be briefer than usual, and published probably a bit later as I have unavoidable dental treatment to undergo. Thank you everyone for your patience and loyalty – it‘s already a little over 3 months since I could start publishing totally independent. Thank you so much for all your support!Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 OutlookThe bears are certainly running (have certainly run) out of time, and the upper knot of yesterday‘s session looks little concerning to me. Tesla enjoying the Bitcoin moves, more tech earnings soon, and favorable sectoral composition of the S&P 500 advance favor the coming upswing.Credit MarketsDebt instruments got under pressure – high yield corporate bonds (HYG ETF) and investment grade ones (LQD ETF) have declined in a signal of non-confirmation, and joined the long-dated Treasuries in their downswing. I am not yet convinced this is a serious enough more to warrant a change in S&P 500 outlook.Technology and FinancialsThe $NYFANG strength continues, powering tech higher – and that‘s the engine behind solid S&P 500 performance. Notably, financials weren‘t waiting yesterday on other value stocks turning higher, and that‘s bullish.Gold, Silver and MinersGold caught a bid, and refused to decline intraday, which almost matches the miners‘ performance. Given these two daily stands, I‘m in favor of disregarding the usual outperformance warning of silver doing considerably better.This is the proper view of the miners and miners to gold ratio – noticeable outperformance in the latter while the former is getting ready to rise again.Gold and the Key RatioAs is visibly even more true today than yesterday, the copper to 10-year Treasury yield ratio shows that the markets aren‘t buying the transitory inflation story – the rush into commodities goes on, and justifiably so. This chart is clearly unfavorable to lower metals‘ prices.SummaryThe S&P 500 keeps pushing for new all time highs, which looks to be a matter of relatively short time only. Credit markets non-confirmation is to be disregarded in favor of strong smallcaps, emerging markets and cornered dollar in my view.Gold and miners are in consolidation mode, but this is little concerning to the bulls. No signs of an upcoming reversal and truly bearish plunge - the precious metals sector is likely to play a catch up relative to commodities as its sluggish post Aug performance would get inevitably forgotten.
Gold Sings a “Hot N Cold” Song

Gold Sings a “Hot N Cold” Song

Finance Press Release Finance Press Release 30.04.2021 18:18
Although spring has begun, we can still find ourselves in winter, or even summer. Gold may benefit from such a seasonal aberration.Oh, how wonderful, spring has finally started, hasn’t it? We have April, after all. Well, in calendar terms, it’s indeed spring, but economically it can be summer already or still the beginning of winter. How so? I refer here to Kondratiev cycles (also known as Kondratieff cycles or Kondratyev cycles).As a reminder, Nikolai Kondratiev was a Russian economist who noted in the 1920s that capitalist economies experience long super-cycles, lasting 40-60 years (yup, it’s not a very precise concept). His idea was that capitalism was not on an inevitable path to destruction, but that it was rather sustainable and cyclical in nature. Stalin didn’t like this conclusion and ordered a prison sentence and, later, an execution for Kondratiev. And you thought that being an economist is a boring and safe profession!The Kondratiev cycles, also called waves, are composed of a few phases, similar to the seasons of the year. In 2018, I defined them as follows:Spring : economic upswing, technological innovation which drives productivity, low inflation , bull market in stocks, low level of confidence (winter’s legacy).Summer : economic slowdowns combined with high inflation and bear market in stocks, this phase often ends in conflicts.Autumn : the plateau phase characterized by speculative fever, economic growth fueled by debt, disinflation and high level of confidence.Winter : a phase when the excess capacity is reduced by deflation and economic depression, debt is repaid or repudiated. There is a stock market crash and high unemployment rate , social conflicts arise.However, other economists define these phases in a slightly different manner. For them, spring is an inflationary growth phase, summer is a period of stagflation (inflationary recession ), autumn a deflationary growth period, while winter is a time of deflationary depression.So, which phase are we in? That’s a very good question. After all, the whole concept of Kondratiev cycles is somewhat vague, so it’s not easy to be precise. But some experts believe that we are likely in the very early part of the winter after a very long autumn . Indeed, there are some important arguments supporting such a view.First, we have been experiencing a long period of disinflation (and later just low inflation), a decline in the bond yields , and economic growth fueled by debt. I refer here to the time from the end of the Great Recession until the Covid-19 pandemic , but one can argue that autumn lasted since the early 1980s, when both interest rates and inflation peaked, as the chart below shows.Second, winter is believed to be a depression phase with stock and debt markets collapsing, but with commodity prices increasing. And this is exactly what we are observing right now. I refer here to the rally in several commodity prices. This is at least partially caused by the disruption in the supply chains amid the epidemic in the U.S. and worldwide pandemic, but if the bull market in commodities sets in for good, this could be a negative harbinger for the stock market. After all, more expensive raw materials eat into corporate profits.Third, winter is thought of as a period that tears the social fabric of society and deepens the inequalities. The data is limited, but the coronavirus crisis has been one of the most unequal in modern U.S. history, as its costs have been borne disproportionately by the poorer parts of society that have been unable to work online.So, “winter is coming” may be a belated warning, as winter could have already begun. Later during this period, we could see bankruptcies of firms and financial institutions, and even some governments, as a delayed consequences of the coronavirus crisis. This is bad news for the whole of Westeros and its economy, but good for gold. Investors who don’t like the cold should grab a golden blanket to hedge them from the winter.However, in 2018, I expressed the opinion that summer may come in the 2020s, as the debts are rising and the inflationary pressure is growing:As the global economy recovered and now expands, inflation is low, while stocks still rally, we enjoy spring. This is why gold has remained in a broad sideways trend in the last few years. However, as we are on the edge of the next technological revolution, confidence is finally rising and there are worries about higher prices, and we could enter the summer phase in the not-so-distant future.And I still believe that my opinion makes sense. Indeed, after the global financial crisis of 2007-9, we have seen several spring features: low inflation, a bull market in stocks, and a low level of confidence (after all, there was “the most hated rally in the stock market”), which was a legacy of winter, i.e., the collapse of Lehman Brothers and the following economic crisis .And summer is generally a period of stagflation, which is exactly what I’m expecting. You see, after a strong economic recovery in the nearest quarters, the U.S. economy is likely to return to a mediocre pace of economic growth, but with much higher inflation. After all, there is strong monetary and fiscal stimulation ongoing right now, another feature of summer. Meanwhile, winter is generally a deflationary period, so the specter of inflation rather suggests that summer may be coming and investors should hedge themselves against waves of gold.Luckily, gold offers its protection not only against winters, but also against summers . Indeed, gold performs the worst during autumns, when there is disinflation, like in the 1980s and the 1990s, and the best during winters (due to the economic crisis – remember the 2000s?) and the summers (due to high inflation – remember the 1970s?).Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get a 7-day no-obligation trial for all of our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
Rising Cost Pressure - What Will Mr. Powell and Mr. Gold Do?

Rising Cost Pressure - What Will Mr. Powell and Mr. Gold Do?

Finance Press Release Finance Press Release 25.05.2021 15:53
The latest IHS Markit Flash U.S. Composite PMI signals very fast economic expansion – but also strong inflationary pressure. Good news for gold, overall.On Friday, the recent IHS Markit Flash U.S. Composite PMI has been published . There are two pieces of news for gold - one good and one bad. Let’s start with the negative information. The report signals an unprecedentedly fast expansion in business activity in May . Indeed, the composite index surge from 63.5 in April to 68.1 this month established a new record.More importantly, both manufacturing and services sectors’ markets have shown strong growth. The former index rose from 60.5 in April to 61.5 in May (also a new record), while the PMI for services soared from 64.7 to 70.1, marking the sharpest jump since data collection for the series began in October 2009. Such an unprecedentedly fast acceleration of growth in the PMI signals strong economic growth, which is clearly bad news for the safe-havens such as gold (however, strong economic growth is something everyone expected, so it might be already priced in as well).The good information is, however, that at least part of this growth is inflationary , as soaring demand greatly improved the firm’s pricing power. And the input costs have surged, leading to the sharpest rise in output charges since the end of the Great Recession when the data collection started:Increasing cost burdens continued to be keenly felt, as the rate of input price inflation soared to a new survey record high, often linked to a further marked worsening of supplier performance. Commonly noted were increases in PPE, fuel, metals and freight costs amid significant supplier delays.The steep rise in costs fed through to the sharpest increase in output charges since data collection began in October 2009, with record rates of inflation registered for both goods and services as soaring demand boosted firms’ pricing power.What’s more, wage inflation is also coming , as the report says that entrepreneurs couldn’t find people to fill the vacancies. It seems that generous benefits introduced in a response to the recession discouraged people from searching for work, and slack in the labor market is greatly exaggerated.Although a solid expansion in staffing levels eased some pressure on backlogs in the service sector, manufacturers registered the fastest rise in work-in-hand on record amid raw material shortages. While job creation was again seen in the goods-producing sector, the rise was the slowest for five months, linked in part to difficulties filling vacancies.In other words, the post-pandemic natural employment will be simply lower because of the institutional changes, not because of weak aggregate demand. How would you explain otherwise the fact that entrepreneurs cannot find workers amid employment lower by 8 million when compared to the pre-pandemic level?But this is good news for gold. The subdued employment would be a great excuse for the Fed to say that there is slack in the labor market, the aggregate demand is weak, and the economy remains fragile and below the Fed’s targets, so it still needs easy monetary conditions. Hence, Powell would stay passive and would even avoid starting to think about tapering the quantitative easing and hiking interest rates . Dovish Fed and rising prices would support gold prices.So, high inflation (see the chart below) should remain with us for a while . Indeed, manufacturers worry that raw material shortages “could extend through 2021” and producer price inflation translates into consumer price inflation with a certain lag. Anyway, high inflation won’t disappear in one or two months, but it could last for at least a few or even several months if the Fed remains ultra- dovish and people lose confidence in the central bank’s ability to maintain price stability.If this scenario happens, inflation expectations could cease to be “well-anchored” and inflation could get out of control, just as it did during stagflation in the 1970s. Chris Williamson, Chief Business Economist at IHS Markit, seems to agree with me in his comment on the report:The May survey also brings further concerns in relation to inflation, however, as the growth surge continued to result in ever-higher prices. Average selling prices for goods and services are both rising at unprecedented rates, which will feed through to higher consumer inflation in coming months.Implications for GoldWhat does the recent IHS Markit Flash U.S. Composite PMI imply for gold? Well, strong economic activity is bad for gold, given that it usually shines during bad times. However, the yellow metal doesn’t like genuine, real growth, but it performs pretty well during inflationary periods . Of course, part of the growth comes from the reopening of the economies, but there is no doubt that this expansion is accompanied by high inflation.I’ve been warning readers since the very early part of the pandemic that the following expansion will be more inflationary than the previous one. This is excellent news for gold, which entered a bear market in 2011-2013 (i.e., when the former expansion settled down). What’s important here is that the economic environment is more inflationary (we have easier monetary and fiscal policies ) while at the same time the Fed is highly tolerant of high inflation – this is a truly dangerous cocktail, but it could be quite tasty for gold.If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Gold: First Steps Down in the Short Term

Gold: First Steps Down in the Short Term

Finance Press Release Finance Press Release 03.06.2021 16:03
Gold rallying on low volume yesterday was a clear bearish sign; the yellow metal dropped about $15 in today’s pre-market trading. What will happen next?Yesterday’s (Jun. 2) and today’s sessions were quite rich in signals for gold, silver, and mining stocks, but only if one knows where to watch.Gold: Short-Term MovesGold closed ~$5 higher yesterday, and this move took place on relatively low volume. In fact, gold hasn’t rallied on volume this low since Apr. 26. This is a bearish sign for the short term, and indeed after the Apr. 26 session, gold moved lower in the following days.And, right on cue, gold was about $15 down in today’s pre-market trading . While this decline might seem surprising to some, it’s actually a perfectly natural thing for gold to do right now.The low-volume daily rally was only a confirmation, as we knew that Tuesday’s daily reversal was critical all along – based on the triangle-vertex-based reversal we recently saw. Combination of this with highly overbought RSI, a sell signal from the stochastic indicator, and, most importantly, the analogies to how the situation in gold developed in 2008 and 2012, provides us with an extremely bearish outlook for gold.Many other factors are pointing to these similarities, and two of them are the size of the correction relative to the preceding decline and to the previous rally. In 2012 and 2008, gold corrected to approximately the 61.8% Fibonacci retracement level. Gold was very close to this level this year, and since the history tends to rhyme more than it tends to repeat itself to the letter, it seems that the top might already be in.In both years, 2008 and 2012, there were three tops. Furthermore, the rallies that took gold to the second and third top were similar. In 2008, the rally preceding the third top was bigger than the rally preceding the second top. In 2012, they were more or less equal. I marked those rallies with blue lines in the above chart – the current situation is very much in between the above-mentioned situations. Also, the current rally is bigger than the one that ended in early January 2021 but not significantly so.Since I realize that it’s most difficult to stay on track right at the top, let me remind you about two key facts:We have open-ended QEs – money is being pumped into the system at an unprecedented pace, even when stocks are well beyond their all-time highs. The world has been in a pandemic for over a year, and the economies were hit hard. And yet, gold – the king of safe hedges – did not manage to soar above its 2011 highs and then stay above them. Given how extremely positive the fundamental situation is, gold’s reaction is even more extremely bearish. This market is simply not ready to soar without declining significantly first. The bull market and bear markets move in stages, and the final slide was postponed multiple times, but it’s clear that gold is not ready to soar to new highs without completing this final stage – the downswing.Remember what happened when gold previously attempted to break above major long-term highs? It was in 2008 and gold was breaking above its 1980 high. Gold wasn’t ready to truly continue its bull market without plunging first. This downswing was truly epic, especially in the case of silver and mining stocks; and now even gold’s price patterns are like what we saw in 2008.Lessons Learned From HistoryMy previous comments on the analogies to 2008 and 2012 remain up-to-date:Back in 2008, gold corrected to 61.8% Fibonacci retracement , but it stopped rallying approximately when the USD Index started to rally, and the general stock market accelerated its decline.Taking into consideration that the general stock market has probably just topped, and the USD Index is about to rally, then gold is likely to slide for the final time in the following weeks/months. Both above-mentioned markets support this bearish scenario and so do the self-similar patterns in terms of gold price itself.What would change my mind with regard to gold itself? Perhaps if it broke above its January 2021 highs and confirmed this breakout. This would be an important technical indication on its own, but it would also be something very different from what happened in 2008 and 2012. If that happened along with strength in mining stocks, it would be very bullish. Still, if the above happened, and miners didn’t react at all or they declined, it would not be bullish despite the gains in the gold price itself.The March 2021 low formed well below the previous low, but as far as other things are concerned, the current situation is similar to what happened in 2012.The relatively broad bottom with higher lows is what preceded both final short-term rallies – the current one, and the 2012 one. Their shape as well as the shape of the decline that preceded these broad bottoms is very similar. In both cases, the preceding decline had some back-and-forth trading in its middle, and the final rally picked up pace after breaking above the initial short-term high.Interestingly, the 2012 rally ended on huge volume, which is exactly what we saw also on May 19 this year. Consequently , forecasting much higher silver or gold prices here doesn’t seem to be justified based on the historical analogies.The thing I would like to emphasize here is that gold didn’t form the final top at the huge-volume reversal on Sep. 13, 2012. It moved back and forth for a while and moved a bit above that high-volume top, and only then the final top took place (in early October 2012).The same happened in September and in October 2008. Gold reversed on huge volume in mid-September, and it was approximately the end of the rally. The final top, however, formed after some back-and-forth trading and a move slightly above the previous high.Consequently, the fact that gold moved a bit above its own high-volume reversal (May 19, 2021) is not an invalidation of the analogy, but rather its continuation.There’s one more thing I would like to add, and it’s that back in 2012, gold corrected to approximately the 61.8% Fibonacci retracement level – furthermore, the same happened in 2008 as you can see in the below chart. Consequently, the fact that gold moved above its 50% Fibonacci retracement doesn’t break the analogy either. And even if gold moves to $1,940 or so, it will not break it. It’s not likely that it is going to move that high, as in both cases –in 2008 and 2012 – gold moved only somewhat above its high-volume reversal before forming the final top. So, as this year’s huge-volume reversal took place close to the 50% retracement and not the 61.8% retracement, it seems that we’ll likely see a temporary move above it, which will create the final top. And that’s exactly what we see happening so far this week.The lower part of the above chart shows how the USD Index and the general stock market performed when gold ended its late-2012 rally and was starting its epic decline. In short, that was when the USD Index bottomed, and when the general stock market topped.Also, please note that while it might seem bullish that gold managed to rally above its declining black resistance line recently (the one based on the 2020 top and the 2021 top), please note that the same happened in 2012 – I marked the analogous line with red. The breakout didn’t prevent gold from sliding. When the price reached the line, we saw a short-term bounce, but nothing more than that – the gold price fell through it in the following weeks.Meanwhile, the USD Index has just confirmed its short-term breakout, suggesting that the analogy to 2016 and the similarity to how it bottomed (triple bottom with lower lows) in mid-2020 remains intact – and so does the bullish outlook for the universally-hated-and-massively-shorted U.S. currency.The USD Index reversed yesterday in a supposedly bearish manner, but today’s pre-market price action shows that it was just a fake reversal. It seems that a major bottom in the USDX is already in, as the breakout above the declining short-term resistance line (that started with the April top) was verified. And with the outlook for the USD Index being bullish, the implications for the precious metals market are bearish.Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.Przemyslaw Radomski, CFA Founder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Is Gold Really an Inflation Hedge?

Is Gold Really an Inflation Hedge?

Finance Press Release Finance Press Release 11.06.2021 17:19
Inflation is back, and that’s usually depicted as good for gold. But is the yellow metal still a hedge against inflation, or has something changed?Inflation has returned. This is partly understandable. After all, during the Covid recession , consumers and businesses accumulated a lot of cash as their spending was reduced, while revenues were sustained by money transfers from the government. These funds are now entering the economy, which makes demand grow much faster than supply, thus boosting prices. After some time, supply may catch up, curbing inflation. However, there is an important risk that inflation will turn out to be higher and/or more permanent than many analysts believe.From the fundamental point of view, gold should benefit from higher inflation. But why? In theory, there are several channels by which inflation supports the yellow metal. First, the inflationary increase in the money supply makes all goods and services more expensive, including gold. Indeed, the scientific paper by Lucey and others finds a reliable long-run relationship between gold and the US money supply.Second, gold is a real, tangible and rare good with limited supply that cannot be increased quickly or at will. These features make gold a key element during the so-called flight into real values or into hard assets, which happens when inflation gets out of control. In other words, gold is the ultimate store of value which proved to hold its worth over time , unlike paper currencies that are subject to inflation and lose their value systematically.Third, inflation means the loss of purchasing power of the currency, so when the greenback depreciates quicker than its major peers, the dollar-denominated price of gold increases. Fourth, when inflation is unexpected or when the Fed remains behind the curve and doesn’t hike nominal interest rates , real interest rates decline, supporting gold prices.Fifth, high inflation increases economic uncertainty, which increases safe-haven demand for gold . In other words, an outbreak of inflation introduces some turbulences and leads to portfolio rebalancing, thus increasing gold’s appeal as a portfolio diversifier . During inflation, bonds underperform, so gold’s attractiveness increases.And last but definitely not least, gold is perceived as an inflation hedge . But is it really a good hedge against inflation? I analyzed this issue a few years ago – it would be nice to provide an update in light of more recent developments. So, let’s take a look at the chart below, which shows gold prices and CPI annual inflation rates.As one can see, the relationship between these two series is far from being perfect. Actually, the correlation coefficient is significantly below zero (-0.41), which means that the correlation is negative ! It means that although there are certain long-term trends – for example, gold rallied during stagflation in the 1970s and entered a bear market during the disinflation period in the 1980s and 1990s – there is no positive relationship between the CPI annual percentage change and the price of gold on a monthly basis.In other words, the data shows that gold may serve as an inflation hedge only in the long run , as gold indeed preserves its value over a long time (for example, in the period from 1895 to 1999, the real price of gold increased on average by 0.3% per year). It is a good choice for investors also when there is relatively high and accelerating inflation, usually accompanied by fears about the current state of the U.S. dollar and a lack of confidence in the Fed and the global monetary system based on fiat monies .However, let’s not draw conclusions too hastily. The chart below also presents the CPI and gold – but this time both series are year-on-year percentage changes (previously we had gold prices, now we have annual percentage changes in these prices).Have you noticed something? Yup, this time both series behave much more similarly . Indeed, the correlation coefficient is now positive (0.44). Hence, there is a positive relationship between gold and inflation although not always seen in absolute prices (but in changes in these prices), and not always seen in the CPI (as inflation has broader effects not limited only to consumer prices).Summing up the above analysis, it seems justified to claim that gold could benefit from the current elevated levels of inflation, especially if it turns out to be more lasting than commonly believed. It will also be good for gold if the Fed remains dovish and tolerant of inflation surpassing its target significantly.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
Will Fed Hawks Peck Gold?

Will Fed Hawks Peck Gold?

Finance Press Release Finance Press Release 02.07.2021 17:13
Although gold doesn’t have to suffer during the actual tightening cycle, the Fed’s hawkish turn is fundamentally negative for gold prices.Oh no, my worst nightmare related to the precious metals has materialized. In the June edition of the Gold Market Overview, I wrote:Of course, gold is not a perfect inflation hedge in the short term. If the interest rates increase or the Fed tightens the monetary conditions in response to inflation, gold may struggle. Actually, the start of normalization of the monetary policy could push gold downward, just as it happened in 2011.And indeed, the Fed turned hawkish in June . The FOMC members started talking about tapering quantitative easing , and at the same time the recent dot-plot revealed great willingness among them to hike interest rates . And, in line with the prediction, gold prices plunged in response to the Fed’s hawkish signals about possible normalization of the monetary policy . As the chart below shows, the London (P.M. Fix) price of gold declined from $1,895 to $1,763 in June.Now, the key question is: what’s next for gold? Was the June slide just a correction? An exaggerated reaction to the not-so-meaningful economic projections of the FOMC members? After all, “they do not represent a Committee decision” and they “are not a great forecaster of future rate moves”, as Powell reminded in the prepared remarks for his press conference in June.But maybe it's the other way around? Did the Fed’s about-face mark the end of the bull market in gold ? Are we witnessing a replay of 2013, where expectations of the Fed’s tightening cycle and higher interest rates (and later the taper tantrum ) sent gold lower, pushing it into bears’ embrace?To find out, let’s check how gold behaved in the previous tightening cycles. As one can see in the chart below, the last tightening cycle of 2015-2019 wasn’t very detrimental for the yellow metal ; gold prices weren’t declining, they remained in the sideways trend.Of course, the tightening created downward pressure on gold. We can see that its price started to rally when the normalization ended, and it accelerated when the Fed turned dovish and started the cycle of interest rate cuts. However, gold didn’t enter a bear market ; it’s consoling news for all gold bulls.Neither the tightening cycle of 2004-2006 was negative for gold prices . On the contrary, the price of gold appreciated in that period. Interestingly, it was a period of rising inflation , as the chart below shows. Similarly, the tightening cycle of the mid-1970s was accompanied by accelerating CPI annual rates , and it was also a positive period for gold.Hence, the upcoming tightening cycle doesn’t have to be bad for the yellow metal . If it is accompanied by rising inflation, gold may rise in tandem with the federal funds rate . So, it turns out that the key is not the actual changes in the Fed’s policy and interest rates, but the expectations of these changes, which translate into the real interest rates .Indeed, the chart below reveals a strong positive correlation between gold prices and real interest rates. It shows that gold suffered not from the actual previous tightening cycle, but from the expectations of the tightening cycle . As one can see in the chart, the yellow metal definitely entered a bear market in late 2012, just when the real interest rates bottomed out. And then, gold prices plunged in 2013 amid the taper tantrum, when the surprising announcement of tapering of asset purchases by Ben Bernanke pushed the bond yields much higher. Importantly, the actual tapering began a few months later, while the first interest rate hike came only in December 2015.So, what does this short review of the previous tightening cycles imply for the gold market? Well, the good news is that gold doesn’t have to suffer from the tightening cycle , especially if higher inflation turns out to be more lasting than commonly believed. This is because the real interest rates will remain low. And, given the increase in the public debt , Wall Street’s addiction to easy money, and the Fed’s dovish bias, the upcoming tightening will probably be less tight than the previous ones.However, I also have some bad news. First, it might be the case that inflation and inflation expectations have already peaked in May, while the real interest rates have reached the bottom. In this scenario, the outlook for gold is rather grim .Second, although gold may be fine with the actual tightening cycle, we are in the expectations phase. And what do I mean by that? Investors are betting that the Fed will start tightening its monetary policy soon; for example, they expect the official announcement on tapering as early as September 2021. And the expectations are what matters. The Fed’s meeting in June could have been a mini taper-tantrum, as it surprised investors, the bond yields rose, and the price of gold plunged. So, if history is any guide, it seems that gold still has more room to slide .Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care.
Gold at a Crossroads of Hawkish Fed and High Inflation

Gold at a Crossroads of Hawkish Fed and High Inflation

Finance Press Release Finance Press Release 30.07.2021 18:27
Gold has been trading sideways recently, but this won’t last forever – the yellow metal is likely to move downward before continuing its rise.So, so you think you can tell heaven from hell, a bull market from a bear market? It’s not so easy, as gold seems to be at a crossroads. On the one hand, accelerating inflation should take gold higher, especially that the real interest rates stay well below zero. On the other hand, a hawkish Fed should send the yellow metal lower, as it would boost the expectations of higher bond yields. The Fed’s tightening cycle increases the interest rates and strengthens the US dollar, creating downward pressure on gold.However, gold is neither soaring nor plunging. Instead, it seems to be in a sideways trend. Indeed, as the chart below shows, gold has been moving in a trading zone of $1,700-$1,900 since September 2020.Now, the obvious question is: what’s next? Are we observing a bearish correction within the bull market that started in late 2018? Or did the pandemic and the following economic crisis interrupt the bear market that begun in 2011? Could a new one have started in August 2020? Or maybe gold has returned to its sideways trend from 2017-2018, with the trading corridor simply situated higher?Oh boy, if I had the answers to all the wise questions that I’m asking! You see, the problem is that the coronavirus crisis was a very special recession – it was very deep but also very short. So, all the golden trends and cycles have intensified and shortened. What used to be years before the epidemic, took months this time. Welcome to a condensed gold market!Hence, I would say that the peak of July 2021 marked the end of the bull market which started at the end of 2018, and triggered a new bear market, as traders decided that the vaccines would save the economy and the worst was behind the globe. This is, of course, bad news for all investors with long positions.I didn’t call the bear market earlier, as the combination of higher inflation and a dovish Fed was a strong bullish argument. However, the June FOMC meeting and its dot-plot marked a turning point for the US monetary policy. The Fed officials started talking about tapering, divorcing from its extraordinary pandemic stance.So, I’ve become more bearish in the short-to-medium term than I was previously. After all, gold doesn’t like the expectations of tapering quantitative easing and rising federal funds rate. The taper tantrum of 2013 made gold plunge.Nonetheless, the exact replay of the taper tantrum is not likely. The Fed is much more cautious, with a stronger dovish bias and better communication with the markets. The quantitative tightening will be more gradual and better announced. So, gold may not slide as abruptly as in 2013.Another reason for not being a radical pessimist is the prospects of higher inflation. After all, inflation is a monetary phenomenon that occurs when too much money is chasing too few goods – and the recent rate of growth of the broad money supply was much higher than the pace needed to reach the Fed’s 2% target. The inflationary worries should provide some support for gold prices. What gold desperately needs here is inflation psychology. So far, we have high inflation, but markets remain calm. However, when higher inflation expectations set in, gold may shine thanks to the abovementioned worries about inflation’s impact on the economy – and, thanks to stronger demand for inflation hedges.In other words, gold is not plunging because the Fed is not hawkish enough, and it’s not rallying because inflation is not disruptive enough. Now, the key point is that it’s more likely that we will see a more hawkish Fed (and rising interest rates) sooner than stagflation. As the chart below shows, the real interest rates haven’t yet started to normalize. When they do, gold will suffer (although it might not be hit as severely as in April 2013).Therefore, gold may decline shortly when the US central bank tapers its asset purchases (and the bond yields increase) while the first bout of inflation softens. But later, gold may rise due to the negative effects of rising interest rates and the second wave of higher inflation.In other words, right now, the real economy is thriving, so inflation is not seen as a major problem, as it is accompanied by fast GDP growth. However, the economy will slow down at some point in the future (partially because of higher inflation) – and then we will be moving towards stagflation, gold’s favorite macroeconomic environment.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get a 7-day no-obligation trial for all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care.
Gold & the USDX: Correlations

Allocation to Gold Is Set to Rise. How Will Prices Respond?

Finance Press Release Finance Press Release 03.08.2021 15:17
The latest WGC reports show that institutional allocation to gold will increase. What if there is more to it than just “higher demand, higher price”?In July the WGC published three interesting reports. The first one, Rethink, Rebalance, Reset: Institutional Portfolio Strategies for the Post-Pandemic Period, is an interesting survey of 500 institutional investors around the world ran by Greenwich Associates between October 2020 and January 2021. The study investigated investors about portfolios, allocations and views on various markets, gold, and other individual asset classes.The main result of the survey is that institutional allocations to gold are expected to increase over the next three years. To be more specific, the study finds that, currently, only 20% of institutions have an allocation to gold in their portfolios, which amounts to 4% of their portfolios, on average. However:Almost 40% of current gold investors expect to increase their allocations in the next three years, and about 40% of institutional investors who do not have gold exposure but have a target or have considered it, plan to make an investment in that time frame.The growing allocation to gold partially reflects rising concern about inflation and a search for inflation-protection assets. According to the WGC, gold performs well in periods of high inflation: in the years when the US CPI annual rates were higher than 3%, gold prices rose 15%, on average. My own research shows that gold doesn’t protect against low inflation readings; it hedges only against high and accelerating inflation.However, the study suggests that institutional investors have a broader view of gold than just as an inflation hedge. Actually, portfolio diversification tops inflation-hedging as the major role gold plays in the portfolios. After all, market downturns often boost demand for gold, as the yellow metal has a negative correlation to risk assets, which often increases when these assets sell off. Also, institutions use gold for long-term risk-adjusted return enhancement, especially in the environment of negative interest rates.Importantly, gold may be useful not only for commercial financial institutions but also for the central banks. The second recent WGC report, Monetary gold and central bank capital, discusses the vulnerabilities specific to central bank balance sheets and discusses how gold holdings can mitigate the risks posed. The publication points out that gold provides central banks with extra protection, as it mitigates the risk of asset losses. In particular, gold offsets gains and losses in the US dollar held as a reserve by central banks all around the world:Gold can play a role as a counter-cyclical hedge to USD exposure because, as the dollar weakens, gold strengthens. Hence, revaluation gains on a central bank’s gold portfolio should offset losses suffered on its USD portfolio and help to maintain its core equity.The last report is Gold mid-year outlook 2021: Creating opportunities from risks. The main thesis is that the negative impact of higher bond yields would likely be offset by inflation and stronger demand for gold as a portfolio-diversification in an environment of ultra-low real interest rates and strong risk-taking.The WGC’s thesis corresponds with my observation that gold is at a crossroads of a more hawkish Fed and higher inflation (I will elaborate on this in the upcoming edition of the Gold Market Overview). The report rightly states that gold’s performance in H1 2021 was driven primarily by higher interest rates, which could continue to create headwinds for the yellow metal in the second half of the year.However, the WGC believes that the Fed will be cautious with its tightening cycle. Although that may be true, gold is likely to struggle during the period of strengthening expectations of quantitative tightening and rising interest rates.Implications for GoldWhat can we learn from the recent WGC reports? Well, I believe that the most important information is that the institutional allocation to gold is going to increase in the upcoming years. Given that investment demand for gold is the most important driver of its price, this is positive news for gold bulls.The survey results should always be taken with a pinch of salt, but the recent ETF flows confirm that there is still significant interest in gold. In June, the inflows to gold ETFs slowed down, as the chart below shows, but remained positive (+2.9 tons) despite the plunge in gold prices.According to the WGC, this adjustment suggests that “investors may have taken advantage of the lower price level to gain long gold exposure”. In other words, gold could decline even more, but inflation concerns provided some support. What’s important, the recent dynamics of the ETFs flows don’t look as bad as in 2013 (at least not yet) when gold definitely sank into the bear market. So, although ETFs flows don’t necessarily drive the gold prices, there is a hope that the upcoming Fed’s tightening cycle will be less harmful to gold than the infamous 2013 taper tantrum.If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. 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Slope Dope? S&P 500 Monthly Candles Aim for Asteroids

Slope Dope? S&P 500 Monthly Candles Aim for Asteroids

Finance Press Release Finance Press Release 03.08.2021 21:58
It’s no secret that the S&P 500 has been leaving all bears in the dust. How does the recent rate of change measure up to previous bull runs?After seeing many bull and bear markets over the years, I have never quite seen a slope of this magnitude. Of course, a picture is worth a thousand words, so:Figure 1 - S&P 500 Index June 1988 - August 2021, Monthly Candles Linear Chart Source stooq.comThe angle of the ascent has dwarfed previous bull markets by far. Of course, there is more than one way to skin a cat. The above chart is a linear chart (most traders, especially short-term traders use linear charts).However, looking at the recent rally in a logarithmic chart, the ascent does not seem quite as steep.Figure 2 - S&P 500 Index June 1988 - August 2021 Monthly Candles Logarithmic Chart Source stooq.comOn a regular (or linear) price chart, each value change is expressed in the same way. This means that a change of $2 to $4 looks identical to a change of $28 to $30.On a logarithmic chart, the amount of percentage change is what is treated identically.Knowing the difference between the two chart types can be beneficial for traders, and keep price moves in perspective. As we can see in the first chart, the upward move in the S&P 500 looks extreme, while shown in the logarithmic price chart, its angle doesn’t look as sharp.Expressing the runup as a percentage of the S&P 500 since the pandemic lows, we are higher by approximately 103% in eighteen months.In comparison, I would like to take a look at the runup from the tech bubble selloff in 2002 to the highs that were made in 2007.Figure 3 - S&P 500 Index January 1995 - April 2010 Monthly Candles Linear Chart Source stooq.comFrom trough to peak (October 2002 - October 2007), it took the S&P 500 five years to move 105%. Let’s keep in mind that the sell-off from the March 2000 peak to the October 2002 lows was over a 2 year and 7-month period.This is more reminiscent of how bear markets used to be in US equities; there were lower prices over longer time periods.In comparison, the coronavirus meltdown in 2020 was a two-month affair, and we have now been moving higher for 17 months since the lows. Was the coronavirus meltdown a flash crash or indeed a bear market?The meltdown was so short-lived and was obviously nothing that we have ever experienced before.What Do I Emphasize Long Term Charts?Markets do have memories. In fact, I find that longer-term charts are more valuable than short-term charts in almost all timeframe comparisons. Since we are in uncharted territory in the US stock indices, we could gain some kind of insight into the previous trough to peak bull runs.In Summary:From pandemic low to current highs in the S&P 500: 103% in eighteen monthsFrom dotcom low to highs before US Financial Crisis: 105% in five yearsIt can be challenging to get a read on where the US equity markets are trading as a whole these days, given that there is no more chart resistance. In addition, market participants are now accustomed to higher highs, and every dip seems like it is bought more quickly than the last. Although using comparisons like this will not provide insight into exact entry and exit levels, such analysis can provide some long-term comparisons in an otherwise incomparable market. I do hope you find value in this perspective.Now, for our premium subscribers, let's review the markets that we are covering (IYT, UDN, ERTH, & TAN). Not a Premium subscriber yet? Go Premium and receive my Stock Trading Alerts that include the full analysis and key price levels.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Rafael ZorabedianStock Trading StrategistSunshine Profits: Effective Investment through Diligence & Care* * * * *This content is for informational and analytical purposes only. All essays, research, and information found above represent analyses and opinions of Rafael Zorabedian, and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. You should not construe any such information or other material as investment, financial, or other advice. Nothing contained in this article constitutes a recommendation, endorsement to buy or sell any security or futures contract. Any references to any particular securities or futures contracts are for example and informational purposes only. Seek a licensed professional for investment advice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Information is from sources believed to be reliable; but its accuracy, completeness, and interpretation are not guaranteed. Although the information provided above is based on careful research and sources that are believed to be accurate, Rafael Zorabedian, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. Mr. Zorabedian is not a Registered Investment Advisor. By reading Rafael Zorabedian’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Trading, including technical trading, is speculative and high-risk. There is a substantial risk of loss involved in trading, and it is not suitable for everyone. Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment when trading futures, foreign currencies, margined securities, shorting securities, and trading options. Risk capital is money that can be lost without jeopardizing one’s financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Rafael Zorabedian, Sunshine Profits' employees, affiliates, as well as members of their families may have a short or long position in any securities, futures contracts, options or other financial instruments including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice. Past performance is not indicative of future results. There is a risk of loss in trading.
Time to Get Selective

Time to Get Selective

Monica Kingsley Monica Kingsley 26.08.2021 16:29
Decreasing volatility gives way to rising one, but don‘t look for it to happen just today. More paring the risk-on bets seems the order of the day as even the dollar and nominal yields went down together. Gentle signs of deterioration were visible in copper wavering intraday and oil getting a bit too optimistic. Stocks though continue running, or should I better say crawling, ahead as value repelled a downswing attempt.Margin debt is contracting, M2 not exactly at the prior rates of growth, but celebrations in the paper and real asset markets largely go on. Gold and silver are understandably lagging in the drummed up taper expectations, but I‘m not looking for any kind of dramatic statement from the Fed. The two steps forward, one step backwards melodrama is likely to continue into the September FOMC, and even that may very well leave the markets guessing. The Fed is in no position to tighten, the economic recovery is likely to continue, and the central bank won‘t kill it – which means continuous noises, and data dependecy as they like to call it.Seeing through the bluff and long journey ahead towards anything even remotely resembling normalized monetary policy, markets would return to the risk-on stance while being more selective in the stock and commodity bull runs. Gold would also benefit from the returning inflation pressures, and the dollar will resume its bear market.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookMarket participants are reluctant to move one way or the other too much next. A little paring back of recent optimism looks most probable to me before the Jackson Hole.Credit MarketsHigh yield corporate bonds are getting way too stretched here, and that increases the odds of a downswing surprise reaching well beyond stocks, into commodities too.Gold, Silver and MinersGold took the nominal yields cue, ignoring the dollar – the yellow metal‘s downswings prior to key events are almost a ritual. Watch for the miners, yields and USD to tip their hand before – my bet is on not too much downside followed by shaking off the little clarity to be introduced by the Fed. Purposely, they won‘t release anything market moving, and that could very much disappoint the taper crowd.Crude OilCrude oil rebound is getting short-term extended, but is unlikely to roll over hard and fast.CopperCopper ran into resistance, and I‘m not looking for it to be overcome very fast. The commodity index though keeps sending positive signals mid-term.Bitcoin and EthereumCryptos are momentarily undecided but the upswing is very far from rolling over. Some more consolidation followed by a new upleg, appears most likely.SummaryBefore the Jackson Hole, I‘m not looking for extensive and sustainable moves one way or the other – that‘s still true. With enough appetite in the risk-on trades reaching short-term saturation point, look for renewed upleg to modestly continue once the Fed meeting gets out of the way.Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
DXCM Stock: Is DexCom investor sentiment turning bearish?

DXCM Stock: Is DexCom investor sentiment turning bearish?

Wall Street Harold Wall Street Harold 12.02.2021 09:02
Despite the DexCom (DXCM) Nick Jonas Super Bowl ad, investors seem to be turning bearish. It is very important to watch insiders of the company you’re invested in and it seems insider faith is dwindling. According to a recent press release, the company stated that it has partnered with Nick Jonas to bring more awareness to DexCom’s continuous glucose monitoring system for diabetes. The ad is expected to run Sunday, February 7th. Despite this partnership, DexCom insiders are selling their stake. This could be a sign that helps investors acknowledge that insider faith is dwindling. There are many reasons as to why these insiders are selling stock, however the most common reasons are that they could believe that the company is heading in the wrong direction. They do this in order to sell before the stock price takes notice which may lead other investors to sell their positions. It’s fair to note that these insiders has been selling all of their shares with no buying positions since February 2020. Another company which may take major market share Another soon to be major player in the diabetes device market is Senseonics (SENS), this company has a new innovative approach. Instead of creating a device that pokes into the skin and limits movement, they created an implantable sensor that goes under the skin and a transmitter which sits atop above the skin. According to recent reviews, the implant procedure is painless and takes less than 10 minutes. In a few years I predict that this company will take major market share from its competitors like DexCom therefore reaching a price target of $20+ after the FDA approves the 180-day CGM device.
Can You Hear It? That’s the Crowd Booing Gold’s Downturn

Can You Hear It? That’s the Crowd Booing Gold’s Downturn

Przemysław Radomski Przemysław Radomski 29.11.2021 15:46
Even though the technicals have been predicting this for several months, people were still taken aback by gold’s fall — that’s why they are booing. While the precious metals received a round of applause for their performances in October, I warned on several occasions that the celebration was premature. And with gold, silver, and mining stocks resuming their 2021 downtrends, investors’ cheers have turned into jeers in short order. To explain, I warned previously that the GDX ETF could rally to or slightly above $35 (the senior miners reached this level intraday on Nov. 12, moving one cent above it). However, with the GDX ETF’s RSI (Relative Strength Index) signaling overbought conditions, I highlighted just how quickly the air often comes out of the balloon. For context, the blue vertical dashed lines below depict the sharp reversals that followed after the GDX ETF’s RSI approached or superseded 70. Why am I telling you this? To emphasize that what happened recently was neither random nor accidental. What you see is a true, short-term top that formed in tune with previous patterns. You also see a fake inverse head-and-shoulders formation that was invalidated. This means that the implications of what happened really are bearish. Let’s check why and how, in tune with the past patterns, the previous broad top really was. Please see below: The GDX ETF rallied on huge volume on Nov. 11 and there were only 4 cases in the recent past when we saw something like that after a visible short-term rally. In EACH of those 4 cases, GDX was after a sharp daily rally. In EACH of those 4 cases, GDX-based RSI indicator (upper part of the chart above) was trading close to 70. The rallies that immediately preceded these 4 cases: The July 27, 2020 session was immediately preceded by a 29-trading-day rally that took the GDX about 42% higher. It was 7 trading days before the final top (about 24% of time). The November 5, 2020 session was immediately preceded by a 5-trading-day rally that took the GDX about 14%-15% higher (the high-volume day / the top). It was 1 trading day before the final top (20% of time). The January 4, 2021 session was immediately preceded by a 26-trading-day rally that took the GDX about 17%-18% higher (the high-volume day / the top). It was 1 trading day before the final top (about 4% of time). The May 17, 2021 session was immediately preceded by a 52-trading-day rally that took the GDX about 30% higher. It was 7 trading days before the final top (about 13% of time). So, as you can see these sessions have even more in common than it seemed at the first sight. The sessions formed soon before the final tops (4% - 24% of time of the preceding rally before the final top), but the prices didn’t move much higher compared to how much they had already rallied before the high-volume sessions. Consequently, since history tends to rhyme, it would have been only natural for one to expect the GDX ETF to move a bit higher here (but not significantly so) and for one to assume that this move higher would take between additional 0 to 7 trading days (based on the Nov. 12 session). That’s what is wrote to my subscribers – to expect this kind of performance. The final top formed on Nov. 16 - 4 trading days after the huge-volume session, practically right in the middle of the expected 0-7 trading day range. Moreover, since the GDX topped very close to its 38.2% Fibonacci retracement, it seems that miners corrected “enough” for another huge downswing to materialize. Having said that, let’s move on to more recent developments. Gold price declined heavily recently and the same goes for the silver price. What’s more, the proxy for junior mining stocks - the GDXJ ETF (our short position) materially underperformed on Nov. 26 – after it declined by nearly 3x the percentage of the GDX ETF – and, in my opinion, more downside is likely to materialize over the medium term. The GDXJ ETF ended the Nov. 26 session slightly below its 50-day moving average, and the milestone is often a precursor to sharp drawdowns. That’s what happened in late February 2020 and also in mid-June 2021. Big declines followed in both cases. Moreover, with the S&P 500’s weakness on Nov. 26 mirroring the onslaught that unfolded in early 2020, the GDXJ ETF’s underperformance follows a familiar script. As a result, another ‘flash crash’ for the pair may unfold once again. Keep in mind, though: while asset prices often don’t move in a straight line, a bullish pause may ensue if/once gold reaches its previous lows. All in all, though, lower lows should confront the GDXJ ETF over the short term and my $35 price target remains up to date. As a reminder, that’s only an interim target, analogous to the late-Feb. 2020 low. Interestingly, it is the February 2020 low along with its late-March 2020 high that created this target. Also, the GDXJ/GDX ratio is falling once again. And with the price action implying that the GDXJ ETF is underperforming the GDX ETF, a drop below 1 isn’t beyond the realms of possibility. In fact, it’s quite likely. As such, this is why I’m shorting the junior mining stocks. For context, I think that gold, silver and the GDX ETF are all ripe for sharp re-ratings over the medium term. However, I think that the GDXJ ETF offers the best risk-reward proposition due to its propensity to materially underperform during bear markets in the general stock market. Finally, the HUI Index/gold ratio is also eliciting bearish signals. For example, I marked (with the shaded red boxes below) just how similar the current price action is to 2013. And back then, after a sharp decline was followed by a small corrective upswing before the plunge, the ratio’s current behavior mirrors its historical counterpart. What’s more, the end of the corrective upswing in 2013 occurred right before gold sunk to its previous lows (marked with red vertical dashed lines in the middle of the chart below). Thus, the ratio is already sending ominous warnings about the PMs’ future path. In addition, with the S&P 500 acting as the bearish canary in the coal mine, the ratio plunged in 2008 and 2020 when the general stock market tanked. Thus, if a similar event unfolds this time around, the gold miners’ sell-off could occur at a rapid pace. For more context, I wrote previously: A major breakdown occurred after the HUI Index/gold ratio sunk below its rising support line (the upward sloping black line on the right side of the chart above). Moreover, with the bearish milestone only achieved prior to gold’s crash in 2012-2013, the ratio’s breakdown in 2013 was the last chance to short the yellow metal at favorable prices. And while I’ve been warning about the ratio’s potential breakdown for weeks, the majority of precious metals investors are unaware of the metric and its implications. As a result, investors’ propensity to ‘buy the dip’ in gold will likely backfire over the medium term. In conclusion, the crowd has turned on the precious metals, and the narrative has shifted once again. However, despite all of the drama and the volatility that came with it, the technicals have been predicting this outcome for several months. And with the GDXJ ETF down by more than 20% YTD (as of the Nov. 26 close), the junior miners’ 2021 performance is far from critically-acclaimed. As a result, the chorus of boos will likely continue over the short- and/or medium term. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFAFounder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care * * * * * All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
It‘s the Fed, Not Omicron

It‘s the Fed, Not Omicron

Monica Kingsley Monica Kingsley 01.12.2021 15:51
S&P 500 plunged on accelerated tapering intentions, and much of the risk-on sectors and commodities followed – even precious metals declined a little in sympathy. But where is the larger reasoning? If the Fed truly intends to taper faster in its belated fight against inflation, it‘s a question of not only markets throwing a tantrum, but of the real economy keeling over. Inflation is a serious problem, including a political one, and here come the Omicron demand-choking effects if the fear card gets played too hard. Thankfully, reports indicate that the alleged variant is merely more contagious and having comparatively milder effects. That‘s how it is usually turns out with mutations by the way – remember that before the number 30 frequently thrown around, shuts off thinking including in the markets. The world‘s economic activity didn‘t come to a standstill with Delta, and it appears such a policy route won‘t be taken with Omicron either. That‘s why I was telling you on Monday that any inflation reprieve the scary news buys, would likely turn out only temporary. Unless the Fed decides to make it permanent, which is what I am doubting based on its track record and the more rocky landscape ahead that I talked in mid Nov extensive article. For now, the Fed‘s pressure is real, and premarket rallies that are sold into during regular sessions, must be viewed with suspicion. It‘s not that we‘ve flipped into a (secular) bear market, but the correction is palpable and real – I‘m not looking for the habitual Santa Claus rally this year. Big picture, the precious metals resilience is a good sign, and return of cyclicals with commodities is the all-clear signal that I‘m however not expecting this or next week. Cryptos resilience is encouraging as much as various stock market ratios (XLY:XLP offers a more bullish view than XLF:XLU – I‘ve been covering these helpful metrics quite often through 2020), which makes me think we‘re in mostly sideways markets for now. At least as I told you on Monday, the (rational / irrational) fears started getting ignored by the markets, meaning we‘re on a gradually improving track. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 isn‘t out of the hot water, and it‘s still just a close in the 4670s that would mark the end of peril to me. The financial sector has to turn, strength has to come to smallcaps simultaneously – the 500-strong index is still performing in a too risk-off way. Credit Markets Positive HYG divergence isn‘t enough – the broad underperformance of S&P 500 must be reversed to establish stronger stock market foundations. Powell just added to the risk-off posture in bonds, and I‘m looking keenly at the expected, ensuing (in)ability to absorb less loose monetary conditions. Gold, Silver and Miners Precious metals are acting weak, but not overly weak. When the markets get fed up with having to bear the tapering / tightening (real and verbal) interventions, it would be gold and silver that rise first. Crude Oil Crude oil turned out indeed weakest of the weak when fear overruled everything. Capitulation is a process, and it‘s quite underway already in my view. The way black gold crashed, the way it would rise once the sky meaningfully clears. Copper Copper weakness is what I don‘t trust here as other base metals did quite better. But again, yesterday was an overreaction to the Fed news that it would discuss speeding up taper. Just discuss. Bitcoin and Ethereum Bitcoin and Ethereum holding relatively high ground, is a reason to think the risk-on scales would tip positive. While BTC is still correcting, I‘m looking for it to join Ethereum. Summary S&P 500, risk-on and commodities aren‘t yet on solid footing as Powell pronouncements outweighed the dissipating corona uncertainty. Either way, the effects on inflation would be rather temporary – inflation indicators clearly haven‘t topped yet as the implicit Fed admission of dropping the word temporary confirms. Once the tightening mirage gets a reality check in the economy and markets, look for precious metals to truly shine. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Bonds Didn‘t Disappoint

Bonds Didn‘t Disappoint

Monica Kingsley Monica Kingsley 03.12.2021 15:57
S&P 500 sharply rebounded, and signs are it has legs. My key risk-on indicator to watch yesterday, HYG, turned up really strongly. No problem that the dollar didn‘t decline, it‘s enough that financials and energy caught some breath. We‘re turning to risk-on as Omicron didn‘t cause the sky to fall. What a relief! Seriously, it doesn‘t look that hard lockdowns would be employed, which means the market bulls can probe to go higher again. What I told you on Wednesday already in the title It‘s the Fed, Not Omicron, today‘s non-farm payrolls illustrate. Such was the game plan before the data release, and this refrain of bad is the new good, is what followed. The Fed is desperately behind the curve in taming inflation, and its late acknowledgment thereof, doesn‘t change the bleak prospects of tapering (let alone accelerated one) into a sputtering economy. What we‘re experiencing currently in the stock market, is a mere preview of trouble to strike in 2022. We‘re in the topping process, and HYG holds the key as stated yesterday. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 returned above the 50-day moving average, the volume wasn‘t suspicious – the bulls have regained the benefit of the doubt, and need to extend gains convincingly and sectorally broadly next. Credit Markets HYG successfully defending gained ground, would be a key signal of strength returning to risk-on assets and lifting up S&P 500. There is still much to go – remember that the sharpest rallies happen in bear markets, so all eyes on HYG proving us either way. Gold, Silver and Miners Precious metals weakness looks deceptive and prone to reversal to me – the real fireworks though still have to wait till the Fed gets doubted with bets placed against its narratives. Crude Oil Crude oil plunge is getting slowly reversed, about to. Beaten down the most lately, black gold is readying an upside surprise. Copper Copper is turning higher, taking time, but turning up – it‘s positive, but still more of paring back recent setback than leading higher. I‘m reasonably optimistic, and acknowledge much time is needed to reach fresh highs. Bitcoin and Ethereum The bearish ambush of Bitcoin and Ethereum didn‘t get too far – crypto consolidation goes on, no need to panic or get excited yet. Summary S&P 500 is in a recovery mode, and the bulls look ready to prove themselves. The keenly watched HYG close presaged the odds broadly tipping the risk-on way, just as much as cyclicals did. It‘s a good omen that commodities are reacting – not too hot, not too cold – with precious metals in tow. In tow, as the Fed isn‘t yet being doubted – the NFPs are a first swallow of its inability to carry out tapering plans till the (accelerated or not) end. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Weekly Close Out

Weekly Close Out

Luke Suddards Luke Suddards 04.12.2021 17:45
Omicron: In today’s weekly I’ll be dedicating some digital ink for the latest information on the new variant omicron. Ok so what are the major points of importance. New admissions to hospitals in Gauteng increased by 144% last week (hospitalisations lag cases by around 1-3 weeks). So far the early data shows the majority of these hospitalisations are from the unvaccinated (if that trend remains that’s positive). However, a recent study released from South Africa indicates reinfection risk is 3 times higher than previous variants. In terms of the deadliness of this variant, the early data looks good with Australia’s Chief Medical Officer Paul Kelly stating that of the 300 cases recorded worldwide all were very mild or had no symptoms at all. However, the sample size is too small so we can’t draw solid conclusions at this stage. The major vaccine makers have offered timelines of two to six weeks for assessing the vaccine escape properties of omicron via in-vitro lab tests. Interestingly, Moderna is less optimistic than Pfizer about expecting current vaccines needing to be tweaked to fend off the omicron variant. Volatility will remain high as the market remains on tenterhooks as new information drips through. Dollar Index (DXY): The greenback is flat on the week, with many quite perplexed by the lack of gains (particularly against the euro) given the hawkish Fed pivot and risk sentiment remaining on edge. The dollar coming in flat is a combination of gains against high-beta cyclical companies offset by losses against traditional safe haven currencies. Just take a look at the charts of USDJPY and AUDUSD. In terms of the euro, I’ll chat more about that below in the EURUSD paragraph. The big domestic news for the dollar this week was Jerome Powell’s hawkish rhetoric. The word transitory is to be retired as he admits the threat of persistently higher inflation has grown. On the QE purchases side of things, he remains open to it being wrapped up earlier than originally expected with a discussion on a faster pace taking place in 2 weeks at their December meeting. He elucidated his thoughts on the employment side of their mandate, stating that a great labour market requires a protracted expansion and in order to achieve this price stability has to occur. I see this as inflation now taking primacy over employment goals, indicating a shift in the Fed’s thinking with regards to inflationary pressures. The hawkish commentary from FOMC members this week such as Daly, Quarles, Barkin and Bostic would certainly suggest this is the case. STIRs are showing rate lift-off for practically June 2022 (96%) and over 2.5 hikes through December 2022. All attention now falls to the Non-Farm Payrolls number out today. The preliminary indicator such as ISM manufacturing index, ADP and jobless claims all pointing towards decent numbers from the jobs report today disappointed as NFP numbers missed expectations by a significant amount. Price moves have been muted as traders may be reluctant to place any fresh positions on and chase with the risk of adverse news over the weekend regarding omicron. Bottom line - traders should expect cross-asset volatility to remain higher over December. Next week we’ll receive November US inflation data, which is expected to remain elevated. DXY has regained the upper trend line of its ascending channel, putting some distance between price and its moving averages. The 21-day EMA continues to provide some dynamic support to price dips. The RSI has held above the key 55 level of support. Targets wise keep an eye out on the 96.5 on the upside and to the downside the 21-day EMA and former support around 95.5. EURUSD: So why did EURUSD strengthen on the market sell-off due to omicron on Friday and has remained fairly defensive throughout this week? It’s certainly not because the euro is a safe-haven currency in times of risk aversion. This price action has more to do with its use as a funding currency. Traders borrow euros to search for higher yield globally which is a decent strategy when risk conditions are favourable, however, when that risk dial flips in other direction we see the typical carry trade unwind, leading to flows back into the euro. Additionally, because expectations for rate hikes with regards to the eurozone are already significantly low, it’s at much less risk of a dovish repricing working favourably in terms of spread differentials with the dollar. Political pressure is rising on the ECB to act, particularly from Germany. A Reuters article out mid-week pointed towards some members wanting to rather hold off declaring their asset purchase intentions at this December meeting due to uncertainty caused by omicron. However, the ECB's Muller stated that he doesn’t think omicron is a reason to shift the scheduled end date for PEPP. Following this line of thought just today Madame Lagarde expressed that she feels certain that PEPP will cease in March as planned, saying markets require clarity in December. On the data front we had better than expected inflation prints from Germany (5.2% YoY) and the eurozone (4.9% YoY). It’s quiet in terms of economic data next week with the ZEW survey out as we lead up to a crucial ECB meeting in two weeks. EURUSD is drifting lower from its 21-day EMA. The RSI has stalled around the 40 level. Looking at the technicals clearly EURUSD is in a downtrend. Rallies in my opinion should be short lived with sellers coming in. Key levels to monitor in both directions are 1.135 (21-day EMA) and on the downside 1.12. GBPUSD: With a vacuum of economic data for the UK, the words of central bankers took centre stage. Bailey didn’t provide much meat at his speech this Wednesday. However, Saunders (leans hawkish) who spoke today has caused a repricing lower in the probability of a 15bps rate hike come December (only an additional 4bps now from around 8bps pre-speech). He expressed the need for potentially taking a patient approach with the uncertainty from omicron. Cable is lower as a result. On the virus front, the UK regulator has given the green light for booster doses to be offered to all adults. Additionally, the government has signed a contract for 114 million vaccine doses from Pfizer and Moderna, including access to modified vaccines if they're needed to tackle omicron and other future variants of concern. On the political front, domestically the Tories held the seat of Old Bexley and Sidcup, however, with a reduced majority. On Brexit, it’s been quiet of late with some optimism around the granting of additional fish licences to French fisherman in Guernsey, Jersey is the more important zone though prone to flare ups in tension. However, temperatures remain high between France and the UK on issues related to immigration. Next week sees UK October GDP data released. EURGBP has been moving higher on the back of dovish commentary (given he’s a hawk) from Saunders as well as benefiting from any souring in risk-sentiment. The 200-day SMA isn’t far aware, which has previously capped price gains. Cable continues to -plumb fresh YTD lows and is now nearing 1.32. The RSI is near to oversold territory but with some room remaining to eke out further losses. Moving averages are all pointing downwards. Targets wise, on the upside the 1.335 and above there former support around 1.34 (21-day EMA too). USDJPY: This pair continues to trade on US 10-year yield moves and now it’s status as a safe-haven currency has kicked back in. Early Friday morning has seen a bid coming in, which could be some pre NFP positioning on expectations of a move higher in the back end of the US yield curve. Put EURJPY on your radar, price is at a key support level around 128. USDJPY is finding support around its 50-day SMA, 113 round number and the 38.2% Fibonacci level. Price is trying to overcome resistance from the 50-day SMA. The former range support is providing some resistance around 113.5. The RSI is trying to get back into its range support around 46. Targets wise on the upside, 114 will be important and on the downside 112.5 (this week's lows). Gold: Gold has slipped below the $1775 support level as the hawkish fed leads to higher short term rates, kryptonite for the shiny yellow metal. Fears over inflation have failed to help gold stay propped up as well as risk-off fears from omicron. Inflation data out from the US next week will be a risk event for gold traders as well as the Fed meeting the following week. Today’s NFP hasn’t ignited much excitement in gold markets. Gold is trying to reclaim the $1775 support level. The 50-day SMA has made a very minor cross above the 200-day SMA. The 21-day EMA has been capping further gains. The RSI is in no man's land around 38. Targets wise, if $1775 is cleared then $1800 opens up (moving averages just below there). On the downside, $1750 comes into view. Oil: Crude fell sharply into a bear market this week as risk-off, Fed tightening, fears over further lockdowns and travel bans from the new omicron variant led to a repricing on the demand side of the equation. OPEC+ the main event for crude traders this week, decided to stick to their scheduled 400k bpd for January, but caveated this with the meeting remaining in “session”, meaning changes to the supply side could be made before their 4 January meeting if omicron causes a further deterioration. This led to yo-yo style price behaviour. Until there is more clarity regarding omicron, I expect oil’s price to remain choppy without a solid price trend. Backwardation spreads have narrowed, indicating a more balanced supply and demand equation. Iranian Nuclear Negotiations began the week positively, but sentiment turned pessimistic towards the end of this week, providing further short-term bullish tailwinds to crude’s price. JPM has some very bullish forecasts with the bank expecting crude to hit $150 by 2023. Oil is having a run at its 200-day SMA. The RSI has moved out of overbought territory and is a fair distance below its 50-day SMA (some mean reversion). Right now price will remain choppy within a range as omicron news flow prevents a trend from forming. Targets wise, on the upside the 200-day SMA and $73.50 dollar mark will be key. On the downside $68 support is important.
Topping Process Roadmap

Topping Process Roadmap

Monica Kingsley Monica Kingsley 06.12.2021 15:43
S&P 500 bulls missed a good opportunity to take prices higher in spite of the sharp medim-term deterioration essentially since the taper announcement. It‘s the Fed and not Omicron as I told you on Wednesday, but the corona uncertainty is reflected in more downgrades of real economy growth. There are however conflicting indicators that make me think we‘re still midway in the S&P 500 topping process and in for a rough Dec (no Santa Claus rally) at the same time, and these indicators feature still robust manufacturing and APT (hazmat manufacturer) turning noticeably down.Still, it‘s all eyes on the Fed, and its accelerated tapering intentions (to be discussed at their next meeting) as they finally admitted to seeing the light of inflation not being transitory. The ever more compressing yield curve is arguably the biggest watchout and danger to inflation and commodity trades – one that would put question mark to the point of answering in the negative whether we are really midway in the topping process. Another indicator I would prefer turning up, would be the advance-decline line of broader indices such as Russell 3000. And of course, HYG erasing a good deal of its prior sharp decline, which I had been talking often last week – until that happens, we‘re in danger of things turning ugly and fast, and not only for stocks should 4530s decisively give.In spite of decreasing yields, the dollar continues acting on the bullish argument introduced 2 weeks ago. Seeing antidollar plays struggle (part of which is the function of inflation expectations drifting lower on the Fed‘s turn – let‘s see when the central bank breaks something, which is a story for another day), is truly a warning of downside risks having sharply increased since Thanksgiving. Not only for stocks, where we might not be making THE correction‘s low, but also for commodities, cryptos and precious metals. In a series of two tweets yesterday, the warning is in regardless of a smooth Monday ahead.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 bears are looking a bit tired here, and the room for an upswing is getting evident. The surge late on Friday concerned both tech and value, thankfully – overall, the market breadth isn‘t though much encouraging.Credit MarketsHYG did successfully defend gained ground, and strength appears very slowly returning – the gains have to continue to sound the all clear, for considerably longer. As said on Friday, the sharpest rallies happen in bear markets, so all eyes on HYG proving us either way.Gold, Silver and MinersPrecious metals are looking fairly stable at the moment – not ready to decline, and still taking time to rebound. The accelerated taper idea didn‘t take them to the cleaners – the real fireworks though still have to wait till the Fed gets really close to choking off growth.Crude OilCrude oil could keep the intraday gains, but appears base building here – similarly to natgas, this is a medium-term buying opportunity as prices would inevitably recover.CopperCopper prices reflect the combined Fed and (to a lesser degree) Omicron uncertainty – it‘s casting a verdict about upcoming real economy growth, and the red metal is still looking undecided, and merely gently leaning towards the bulls.Bitcoin and EthereumThe bearish ambush of Bitcoin and Ethereum was reserved for the weekend, and the bleeding hasn‘t stopped so far.SummaryS&P 500 looks to have reached the low, but the jury remains out as to whether that‘s THE low. I highly recommend reading today‘s analysis for it lays out the key metrics to watch in its opening part. The nearest days and weeks will be of crucial importance in determining whether the worst in the stock market and commodities correction is behind us, or whether we still have some more to go.Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
S&P 500 Still Above 4,500 – Have Stocks Bottomed?

S&P 500 Still Above 4,500 – Have Stocks Bottomed?

Paul Rejczak Paul Rejczak 06.12.2021 15:31
  The S&P 500 index broke slightly below the 4,500 mark on Friday, but it bounced from that support level again. Is this a bottoming pattern? For in-depth technical analysis of various stocks and a recap of today's Stock Trading Alert we encourage you to watch   The broad stock market index lost 0.84% on Friday following Thursday’s advance of 1.4%. On Friday the index fell the lowest since the October 19 and it went below its early September local high of around 4,546 again. Overall, it lost 5.24% from the Nov. 22 record high of 4,743.83. Stocks fluctuate since last week’s Wednesday, so is this a bottoming pattern? For now, it looks like a flat correction or a consolidation within a downtrend. This morning the broad stock market is expected to open 0.4% higher and we may see some more short-term consolidation following the recent declines. The nearest important support level is still at 4,500. On the other hand, the resistance level is at 4,580-4,600, marked by the recent local lows. The S&P 500 remains below its short-term downward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com): Nasdaq 100 Broke Below the 16,000 Level Let’s take a look at the Nasdaq 100 chart. The technology index remained relatively stronger than the broad stock market recently but on Friday it broke below the support level of 16,000 and it was relatively weaker than the S&P 500 index that day. The tech stocks’ gauge fell below the early September local highs, as we can see on the daily chart: Conclusion The S&P 500 index slightly extended its downtrend on Friday and it was 5.24% below the November 22 record high. So it is still just a downward correction and not a new bear market. But we may see some more downside. For now, it looks like a consolidation within a downtrend, as there have been no confirmed positive signals so far. Here’s the breakdown: The S&P 500 slightly extended its short-term downtrend on Friday. A speculative short position is still justified from the risk/reward perspective. We are expecting an over 5% correction. Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Paul Rejczak,Stock Trading StrategistSunshine Profits: Effective Investments through Diligence and Care * * * * * The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
The worst-case scenario for Bitcoin

The worst-case scenario for Bitcoin

Alex Kuptsikevich Alex Kuptsikevich 07.12.2021 08:42
On Monday, along with rising risk appetite in global markets, buying interest in cryptocurrencies returned. The cryptocurrency fear and greed index added 9 points to 25 overnight. This is still an area of extreme fear, but recent dynamics of the largest coins indicate that this is now the moment for investors with increased risk appetite to enter. BTCUSD has added 4.9% in the last 24 hours, trading just above the $51K level. The RSI on the daily candlestick charts has retreated from below 30 (oversold area). The price has found support from buyers at the important 200-day moving average. This is a strong signal for many participants that the whole market stays in a long-term bullish phase. But so far, we see very cautious buying, which is creating doubts. A better signal would be a sharp move up, crossing this line, as in July and October this year and before that in April 2020. This is quite an optimistic scenario for bitcoin, where it gets sustained bullish support, preventing it from descending into an uncontrollable fall. The pessimistic scenario for bitcoin, and the entire cryptocurrency market, assume a bullish/bearish sentiment tied to 4-year halving cycles. The previous two bear markets came in 2014 and 2018, giving speculators a good shake out of that train and leaving only the most resilient crypto enthusiasts. A sharp reversal to the downside after a dizzying rise came in late 2013 and 2017 and lasted about a year. This suggests a high risk of reversal at the end of 2021. From peak to bottom in 2013-2014, BTC lost more than 70%, and in 2017-2018 – 85%. A repetition of these scales sets BTCUSD up for a pullback in the 10-20k range. In our view, even a decline to 20k - the highs of the previous cycle - looks like a very pessimistic scenario for now. But it may well materialise under a negative set of circumstances, though it is bound to attract the interest of long-term buyers. Bitcoin needs to pass several checkpoints before we seriously consider such a scenario. The first one is the 200-day moving average (currently at 48k). Confirmation we will get on the decline under $40K, the level of previous local lows.
Bitcoin’s fall under $48K will open the way to $41K or $30K

Bitcoin’s fall under $48K will open the way to $41K or $30K

Alex Kuptsikevich Alex Kuptsikevich 10.12.2021 08:47
The crypto market has lost 4.2% of its capitalisation in the past 24 hours and now stands at $2.27 trillion. From the peak levels reached a month ago, capitalisation has dropped by 23%, allowing us to speak of the start of a bear market for the sector, at least like the one we saw in April-July. The cryptocurrency fear and greed index dropped from 29 to 24, slipping into the extreme fear territory. Alarmingly, the overall capitalisation this time was pulled down by altcoins. The first cryptocurrency lost around 3% over the day, returning to $48.3, where the 200-day moving average runs and touched the oversold area again. A significant short-term indicator for the market promises to be the 200-day average for Bitcoin. An ability to bounce back above that line would indicate bullish sentiment prevails and promises new attempts to climb above $50K or $60K this month. A sharp fall would formally clear the way for a deeper correction to $41K or even $30K. ETHUSD has been losing 6% over the last 24 hours and is dangerously close to the psychologically significant $4000 level. The latest momentum of the decline pushed the first altcoin away from the 50-day moving average, and a deeper correction may follow. Ether fell out of the bullish uptrend from the end of September and went into a prolonged consolidation. The declines yesterday and this morning brought the coin back to the lower end of the consolidation range, and a dip under $4000 would open a straight road down with a potential target at $3300 or further to $2700. Bitcoin’s share of the crypto market has started to rise again, reaching 40.3%. We see this growth in a falling market as an additional sign of fear of the crypto market.
Market Digest Friday 10 Dec; hold your breath, big elements to watch inflation, volatility and iron ore

Market Digest Friday 10 Dec; hold your breath, big elements to watch inflation, volatility and iron ore

Jessica Amir Jessica Amir 10.12.2021 10:34
Equities 2021-12-10 00:00 4 minutes to read Summary:  Markets are facing speed bumps again as investors await key inflationary numbers and the Feds meeting outcome, key catalyst that will ultimately change market dynamics, with fiscal stimulus being taking away. The US benchmark the top 500 stocks fell from record high territory, falling for the first time in 4 days, while the ASX200 fell for the second day, dipping below its 50 day moving average. Growth names are being sold down and safe haven assets, bonds, the USD, the JPY, are gaining appeal. It is for three important reasons. Here is what you need to know and consider, plus the five elements to watch today. Firstly, investors are holding their breath ahead of key events: Friday’s US inflation data (tipped to show inflation rose 6.8% YOY in November), plus we are also seeing investors pre-empt that the Federal Reserve next week, will map out tapering and interest rate hikes for 2022. A poll by Reuters showed that 30 of the 36 economists expect the Fed to hike rates sooner than thought, rising rates four times from the third quarter of the year 2022 to the second quarter of 2023 (expecting rates to be 1.25-1.50%). This explains why investors took profits from nine of the major 11 US sectors overnight. So growth stocks and sectors that thrive in low interest rates; consumer discretionary, real estate and information technology, saw the most selling as a result. From a stock perspective Tesla fell 6%, Semiconductor giant Advanced Micro Devices, and Etsy-the e-commerce vintage store, both fell 5%, and chip maker Nvidia fell 4%. If you look at Saxo Markets themes that we track, you can also see the most money on a month-on-month basis, has come out of semiconductors, while the other themes we track are posting monthly gains. Secondly, it’s critical to be aware, the UK Prime Minister announced restrictions to curb Omicron’s spread -  so the UK entered new work-from-home guidance, that could cost the UK economy $2.6 billion a month (according to Bloomberg). Meanwhile, a study by a Japanese scientist found the new variant to be 4.2 times more transmissible in its early stage than delta. As such some companies are responding like Lyft saying their workforce can work remotely in 2022, while Jefferies asked staffers to WFH. This means, travel and tourism stocks could see short term pressure, Australian and US stocks that are exposed to the UK could also see pressure, while oil could see demand weakness here. Plus, it could be time to again rethink exposure to the office property sector, as it’s a likely to remain squeezed, while industrial and logistics real estate remain supported given the likely new shift to WFH. Thirdly – be aware of volatility. A measure of this, VIX CBOE Volatility Index rose for the first time in four days, rising back above the 50 day average. Volatility has fallen from its 12-month high and remains contained right now as Pfizer said its vaccine can neutralize the new COVID strain Omicron after three doses (two doses offer protection again severe disease). However, keep your ears to the ground. If tomorrow’s inflation data from the US is worse than expected, expect volatility to spike, and growth stocks to see further selling and expect safe haven assets (USD, bonds, USDJPY) to gain more attraction. Aside from the above – here’s 5 things to watch today; Firstly - let's go over Fortescue Metals (FMG) 1.FMG’s CEO, Elizabeth Gains just announced she is standing down, right in the thick of iron ore having a murky outlook. It’s not been an easy 12 month for FMG holders. FMG trades 7% lower this year, but it’s a far cry from its all-time high, down 30% from its peak as iron ore price remains in a bear market (down 40% from May). 2. FMG’s trading range has been restricted for two weeks as the world holds its breath to learn more about China’s property sector. FMG shares have broken out above their 50 day moving average but its trading has been even more so restricted over the last three days as its stock hit a key resistance level awaiting news from China. If good news comes, FMG could break out higher. But it looks murky. Majority of FMG revenue (94%) comes from iron ore, and its majority sold to China (90%) (unlike BHP that now diversifies its sales to other countries). And now… we are getting mixed signals from China, making iron ore’s outlook look hazy. 3. On the positive side; week-on-week Australian iron ore exports are up. China has increased its monthly imports of Australian iron ore in November, more than expected. This has supported the iron ore price rising 8.9% this week. 3. But on the negative side - Evergrande, one of China’s biggest property developers was just officially downgraded -labelled a defaulter by Fitch Ratings after failing to meet two coupon payments after a grace period expired Monday. This may now trigger cross defaults on Evergrande’s $19.2 billion of dollar debt. Also at the same time JP Morgan downgraded its outlook for iron ore expecting the iron ore to fall 7% to $92, while Citi expects seaborne iron ore prices to fall 60-$80/t in 2022 on Chinese policy changes. 4. However, Fortescue has been in the news this week, for its shift to a green future. Was this a tactic? A smoke Bomb? Yesterday FMG announced its Future Industries department signed a pact with the Indonesia to explore hydrogen projects. The day before Fortescue Future Industries (FFI) and AGL Energy (AGL) teamed up to explore repurposing NSW coal-fired power plants and turning them into green hydrogen production facilities – to hopefully create renewable electricity production, 250 megawatts (which will generate 30,000 tonnes of green hydrogen per year). AGL and FMG will undertake a feasibility study to repurpose AGL’s Liddell and Bayswater power stations, that both accounted for 40% of NSW’s carbon dioxide emissions. Sheesh. Secondly  – Australian analyst rating changes to consider ANZ AU: Reiterated as a Bell Potter BUY, PT $30.00, RRL AU: Regis Resources Raised to Outperform at RBC; PT A$2.50 EBO NZ: EBOS Raised to Outperform at Credit Suisse; PT NZ$43.14 FMG AU: JPMorgan downgrades FMG from Overweight to Neutral, dropping its PT from $22 to $20. RIO AU: JPMorgan downgrades RIO from Overweight to Neutral, dropping its PT from 113.00 to 102. MIN AU:  Reiterated as JPMorgan hold/neutral, dropping its PT from $47 to $40 Thirdly  - what else to watch today Annual General Meetings: HMC AU, PDL AU, PH2 AU, SOL AU Other Shareholder Events: AOF AU, HMC AU THL NZ: Tourism Holdings Halted in NZ Pending Proposed Transaction ADPZ NA: APG Buys 16.8% Stake in Ausgrid from AustralianSuper EBO NZ: Ebos Successfully Raises A$642m From Share Placement Fourthly - Economic news out 8:30am: (NZ) Nov. Business NZ Manufacturing PMI, prior 54.3 8:45am: (NZ) Nov. Card Spending Total MoM, prior 9.5% 8:45am: (NZ) Nov. Card Spending Retail MoM, prior 10.1% Fifthly - Other news to keep in mind: Australia Seen Facing Steeper Borrowing Costs If Slow on Climate RBA Likely to Stick With QE Until Election Over, BofA Says      ---   Markets - the numbersUS Major indices fell: S&P 500 -0.7% Nasdaq -1.7% Europe indices closed lower: Euro Stoxx 50 lost 0.6%,London’s FTSE 100 lost 0.2% flat, Germany’s DAX fell 0.3%Asian markets closed mixed: Japan’s Nikkei fell 0.5%, Hong Kong’s Hang Seng rose 1.1%, China’s CSI 300 rose 1.7%. Yesterday Australia’s ASX200 fell 0.3% Futures: ASX200 hints of a 0.14% fall today Commodities: Iron ore rose 1.3% to $110.50. Gold fell 0.4%, WTI crude fell 2% to  $70.94 per barrel. Copper fell 1.4% Currencies: Aussie dollar trades 0.4% lower at 0.7146 US. Kiwi down 0.3% to 0.6788 per US$ Bonds: U.S. 10-year yield fell 3.5bps to 1.4871%,Australia 3-year bond yield fell 0.8bps to 0.95%, Australia 10-year bond yield rose 6bps to 1.68%
All’s Well That Ends Well, But Gold Is Far From Finished

All’s Well That Ends Well, But Gold Is Far From Finished

Przemysław Radomski Przemysław Radomski 10.12.2021 13:51
  Fundamentals are as strong as ever, but gold has to go some way down before it can resume its uptrend. Think of Moria from The Lord of the Rings. While inflation has soared, the S&P 500 has soared, WTI has soared, and copper has soared, 2021 has been extremely unkind to the precious metals. Gold has declined by 6.25%, silver by 16.66% and the GDX ETF by 14.83% YTD – not to mention the GDXJ ETF (our short position), which is down by 24.91% (all as of the Dec. 9 close). Moreover, investors often assume that material underperformance provides them with buying opportunities. I mean, why not position for a reversion to the mean? However, the harsh truth is that bearish technicals predicted these drawdowns well in advance. And while 2021 has been rough, the charts signal more downside in 2022. To explain, while gold prices, silver prices, and mining stocks rallied hard in October, their price action was more of a trick than a treat. And with the trio becoming part of the bears’ Thanksgiving dinner in November, only Santa Clause can save them now. However, while the S&P 500 had uplifted sentiment, the GDX ETF closed the Dec. 9 session one cent below its Dec. 3 close and the senior miners gave back all of their early-week stock-market-induced gains. As a result, investors aren’t showing much faith in the GDX ETF’s medium-term prospects. Please see below: As further evidence, the GDX ETF’s 4-hour chart is also sending ominous signals. For example, after running into its declining resistance line (the red dashed line on the right side of the chart below), the senior miners’ momentum fizzled, and a sharp decline followed. For more context, I wrote the following on Dec. 7 and updated the analysis on Dec. 9: After verifying the breakdown below its rising support line, the GDX moved lower, just as I expected it to. Now it’s after a breakdown below its previous (November) lows, and it seems to be verifying that breakdown just as it verified the breakdown below the rising support line in late November. The black dashed line in the above chart shows the resistance provided by the previous lows. It wasn’t invalidated. At the same time, the GDX is well below its declining red resistance line, and even if it moves close to this line but then declines, it will not be viewed as something bullish. What happened yesterday (Wednesday) and on Tuesday is exactly what I put in bold. Gold miners moved to their declining red resistance lines and then they moved back down. As far as the November lows are concerned, while it might not be 100% clear based on the above chart, it is the case that the lowest daily close in November was $31.53, and yesterday, the GDX ETF closed the day at $31.49. As the daily closes are more important than the mid-session candlestick closes, I don’t view the breakdown below the November lows as invalidated. Showcasing similar weakness, the GDXJ ETF also reversed sharply after slightly breaking above its declining resistance line (the black dashed line on the right side of the chart below). The invalidation of the breakout served as a strong sell sign, and it’s no wonder that junior miners declined by almost 3% yesterday. Moreover, investors rejected the junior miners’ attempt to rally back above their November lows. As a result, whether big or small, the gold miners have struggled mightily. Please see below: To that point, with more negativity likely to commence in the coming weeks and months, I wrote on Dec. 2 that the selling pressure may persist until the GDXJ ETF reaches its September lows: One of the previous situations that’s similar to the current one is what we saw right before the mid-year top. I marked mid-year declines (from the start to the first more visible correction) in both charts: GDX and GDXJ with orange rectangles. If the history repeats itself, both proxies for mining stocks could move back to their previous 2021 lows before correcting. Please see below: Finally, while I’ve been warning for months that the GDXJ/GDX ratio was destined for devaluation, the ratio has fallen precipitously in 2021. Interestingly, the ratio is still moving lower, its RSI was previously overbought, and similar periods of excessive optimism have preceded major drawdowns (marked with the black vertical dashed lines below). For example, the ratio showcased a similar overbought reading in early 2020 – right before the S&P 500 plunged. On top of that, the ratio is still near its mid-to-late 2020 lows and its mid-2021 lows. As a result, the GDXJ ETF will likely underperform the GDX ETF over the next few months. It’s likely to underperform silver in the near term as well. Furthermore, a drop below 1 in the ratio isn’t beyond the realms of possibility. In fact, it’s actually quite likely – that’s what happened in 2020 as well, and that’s why I’m shorting the GDXJ ETF. For context, I believe that gold, silver, and the GDX ETF are all ripe for sharp re-ratings over the medium term. However, it’s my belief that the GDXJ ETF offers the best risk-reward ratio due to its propensity to materially underperform during bear markets. As a result, shorting junior miners remains the most prudent strategy, in my opinion. In conclusion, while the seasons have changed, gold, silver, and mining stocks’ downtrends have remained the same. With a cold winter likely to culminate with new lows, the precious metals should embark on a tumultuous journey over the medium term. However, as Shakespeare told us: all's well that ends well. And with gold, silver and mining stocks poised to soar in the years to come, the bulls should have the last laugh over the long term. In the meantime, patience is prudent, as sharp drawdowns will likely materialize before the precious metals resume their secular uptrends. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFAFounder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care * * * * * All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
FOMC meeting and Christmas will take crypto off pause

FOMC meeting and Christmas will take crypto off pause

Alex Kuptsikevich Alex Kuptsikevich 13.12.2021 09:36
Cryptocurrencies avoided strong moves over the weekend. Bitcoin failed to significantly move away from its 200-day moving average and Ether from the $4000, leaving short-term traders in limbo. The capitalisation of all cryptocurrencies has barely changed in the past 24 hours, remaining at 2.26 trillion. The cryptocurrency Fear and Greed Index is gradually recovering, rising to 28 (fear) against a low of 16 on Saturday morning. But as we can see, the state of extreme fear has not pushed key coins over the red lines. Bitcoin saw demand last week on intraday declines below $48K. Buyers support prevented it from getting below a critical technical level. But we are alarmed that the bulls managed to push the rate only slightly higher. If the bulls surrender this defensive line, a mighty avalanche of liquidation of marginal long positions is likely. If that happens, we expect volatility to spike to a magnitude similar to what we saw on the first Saturday in December and earlier in September and May. ETHUSD is hovering around $4000, and bounces from that level are getting lower in December. So far, Ether has withstood the sellers' onslaught, defending the round level and the September highs area. However, a fifth consecutive week of declines is lousy publicity for cryptocurrencies. The key demand drivers are still speculative expectations of price growth rather than company performance as in shares. Investors in the two major cryptocurrency coins have paused to assess the situation. They are waiting for meaningful signals for a continued bullish trend or the start of a bear market. The markets seem to be lacking new drivers for a strong bullish rally in the major cryptos. This week, financial market attention will be focus on the Fed meeting, and cryptocurrencies could come off pause if the Central Bank's comments elicit an unequivocal market reaction. Investors should also note that Bitcoin often makes strong moves around Christmas.
On a Knife-Edge

On a Knife-Edge

Monica Kingsley Monica Kingsley 13.12.2021 15:04
S&P 500 recaptured 4,700s on little change in market breadth and ever so slowly coming back to life HYG. Credit markets made a risk-on move, but HYG isn‘t leading the charge on a medium-term basis in the least – it‘s improving, but the stiff headwinds in bonds are being felt. Given the CPI discussed at length on Friday, it‘s still a relative success. Make no mistake though, time is running short in this topping process, and trouble is going to strike earliest after the winter Olympics. Global economic activity might be peaking here, and liquidity around the world is shrinking already – copper isn‘t too fond of that. The Fed might attempt to double the monthly pace of tapering to $30bn next, but I doubt how far they would be able to get at such a pace. Inflation and contraction in economic growth are going to be midterms‘ hot potatoes, and monetary policy change might be attempted. Tough choices for the Fed missed the boat in tapering by more than a few months. 2022 is going to be tough as we‘ll see more tapering, market-forced rate hikes (perhaps as many as 2-3 – how much closer would yield curve control get then?), higher taxes and higher oil prices. Stocks are still likely to deliver more gains in spite of all the negative divergences to bonds or other indices (hello, Russell 2000). Copper would be my indicator as to how far further we have to go before GDP growth around the world peaks. Oil is ready for strong medium-term gains, and I‘m not looking for precious metals to yield much ground. Silver though is more vulnerable unless inflation returns to the spotlight. Cryptos do likewise have issues extending gains sharply. All in all, volatility is making a return, and it isn‘t a good news for the bulls. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 advance continues, and I‘m looking for ATHs to give in. It will take a while, but the balancing on a tightrope act continues. Credit Markets HYG strength didn‘t convince, but it didn‘t disappoint either – the constellation remains conducive to further stock market gains. So far and still conducive. Gold, Silver and Miners Precious metals are stronger than miners, and the lackluster, sideways performance is likely to continue for now – fresh Fed policy mistake is awaited, and it‘s actually bullish that gold and silver aren‘t facing more trouble when the consensus expectation is faster taper. Crude Oil Crude oil upswing is still struggligh at $72, and remains favored to go higher with passage of time as excess production capacity keeps shrinking while demand isn‘t being hit (no, the world isn‘t going the lockdowns route this time). Copper High time copper stopped hesitating, for its sideways trading is sending a signal about future GDP growth. The jury is still out in the red metal‘s long basing pattern – a battle of positive fundamentals against shrinking liquidity and possibly slowing growth. Bitcoin and Ethereum Bitcoin and Ethereum bottom searching goes on, and I suspect at least a test of Friday‘s lows is coming. I don‘t see too many signs of exuberance returning right away as Ethereum hasn‘t yet started to outperform. Summary S&P 500 bulls continue climbing a wall of worry even if credit markets don‘t confirm entirely. Risk-on and real assets rally is likely to continue, and the road would be getting bumpier over time. The Fed won‘t overcome market expectations, and the last week of Nov (first week of balance sheet contraction) pace wouldn‘t be consistently beaten without consequences down the road. Select commodities and precious metals are already feeling the pinch, but there is no sending them to bear markets. Get ready for the twin scourge of persistent inflation and slowdown in growth to start biting increasingly more. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Another Inflation Twist

Another Inflation Twist

Monica Kingsley Monica Kingsley 14.12.2021 15:45
S&P 500 gave up premarket gains, and closed on a weak note – driven by tech while value pared the intraday downswing somewhat. Market breadth still deteriorated, though – but credit markets didn‘t crater. Stocks look more cautious than bonds awaiting tomorrow‘s Fed, which is a good sign for the bulls across the paper and real assets. Sure, the ride is increasingly getting bumpy (and will get so even more over the coming weeks), but we haven‘t topped in spite of the negative shifts mentioned yesterday. The signs appear to be in place, pointing to a limited downside in the pre-FOMC positioning, but when the dust settles, more than a few markets are likely to shake off the Fed blues. I continue doubting the Fed would be able to keep delivering on its own hyped inflation fighting projections – be it in faster taper or rate raising. Crude oil is likewise just hanging in there and ready – the Fed must be aware of real economy‘s fragility, which is what Treasuries are in my view signalling with their relative serenity. We‘ve travelled a long journey from the Fed risk of letting inflation run unattented, to the Fed making a policy mistake in tightening the screws too much. For now, there‘s no evidence of the latter, of serious intentions to force that outcome. Lip service (intention to act and keep reassessing along the way) would paid to the inflation threat tomorrow, harsh words delivered, and the question is when would the markets see through that, and through the necessity to bring the punch bowl back a few short months down the road. As stated yesterday: (…) Global economic activity might be peaking here, and liquidity around the world is shrinking already – copper isn‘t too fond of that. The Fed might attempt to double the monthly pace of tapering to $30bn next, but I doubt how far they would be able to get at such a pace. Inflation and contraction in economic growth are going to be midterms‘ hot potatoes, and monetary policy change might be attempted. Tough choices for the Fed missed the boat in tapering by more than a few months. 2022 is going to be tough as we‘ll see more tapering, market-forced rate hikes (perhaps as many as 2-3 – how much closer would yield curve control get then?), higher taxes and higher oil prices. Stocks are still likely to deliver more gains in spite of all the negative divergences to bonds or other indices (hello, Russell 2000). Copper would be my indicator as to how far further we have to go before GDP growth around the world peaks. Oil is ready for strong medium-term gains, and I‘m not looking for precious metals to yield much ground. Silver though is more vulnerable unless inflation returns to the spotlight. Cryptos do likewise have issues extending gains sharply. All in all, volatility is making a return, and it isn‘t a good news for the bulls. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 ran into headwinds, and fresh ATHs will really take a while to happen, but we‘re likely to get there still. Credit Markets HYG didn‘t have a really bad day – just a cautious one. Interestingly, lower yields didn‘t help tech, and that means a sectoral rebalancing in favor of value is coming, and that the current bond market strength will be sold into. Gold, Silver and Miners Precious metals held up fine yesterday, but some weakness into tomorrow shouldn‘t be surprising. I look for it to turn out only temporary, and not as a start of a serious downswing. Crude Oil Crude oil continues struggling at $72, but the downside looks limited – I‘m not looking for a flush into the low or mid $60s. Copper In spite of the red candle(s), copper looks to be stopping hesitating, and is readying an upswing. I look for broader participation in it, and that includes commodities and silver. The run up to tomorrow‘s announcement would be telling. Bitcoin and Ethereum Bitcoin and Ethereum bottom searching goes on, yesterday‘s downside target was hit, and the bulls are meekly responding today. I don‘t think the bottom is in at $46K BTC or $3700s ETH. Summary Risk-off mood is prevailing in going for tomorrow‘s FOMC – the expectations seem leaning towards making a tapering / tightening mistake. While headwinds are stiffening, we haven‘t topped yet in stocks or commodities, but the road would be getting bumpier as stated yesterday. Select commodities and precious metals are already feeling the pinch late in today‘s premarket trading, but there is no sending them to bear markets. Get ready for the twin scourge of persistent inflation and slowdown in growth to start biting increasingly more – just-in producer price index (9.6% YoY, largest ever) confirms much more inflation is in the pipeline, and the Fed would still remain behind the curve in its actions. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Tough Choices Ahead

Tough Choices Ahead

Monica Kingsley Monica Kingsley 15.12.2021 15:51
S&P 500 declined on poor PPI data, with financials virtually the only sector closing in the black. Rising yields and risk-off credit markets, that‘s the answer – markets are afraid of a more hawkish Fed than what they expect already. While the central bank will strive to project a decisive image, I‘m looking for enough leeway to be left in, and packaged in incoming data flexibility and overall uncertainty. Good for them that the fresh spending initiative hasn‘t yet passed. Still, I‘m looking for the Fed to be forced during 2022 to abruptly reverse course, and bring back the punch bowl. Treasuries look serene, and aren‘t anticipating sharply higher rates in the near term – not even inflation expectations interpreted higher PPI as a sign that inflation probably hasn‘t peaked yet. This isn‘t the first time inflation is being underestimated – and beaten down commodities (with copper bearing the brunt in today‘s premarket) reflect that likewise. Only cryptos are bucking the cautious entry to the Fed policy decision, and decreasing liquidity, in what can still turn out as a lull before another selling attempt. I think that the overly hawkish Fed expectations are misplaced, and that the risk-on assets would reverse the prior weakness – both today and in the days immediately following, which is when the real post-Fed move emerges. Odds are that it would still be up across the board. Yes, I‘m looking for the Fed speak to be interpreted as soothing – as one that would still result in market perceptions that the real bite isn‘t here yet, or doesn‘t look too real yet. Big picture is that public finances need inflation to make the debt load manageable, and that ample room to flex hawkish muscles isn‘t there (as retail data illustrate). As I wrote in yesterday‘s summary: (…) Risk-off mood is prevailing in going for tomorrow‘s FOMC – the expectations seem leaning towards making a tapering / tightening mistake. While headwinds are stiffening, we haven‘t topped yet in stocks or commodities, but the road would be getting bumpier as stated yesterday. Select commodities and precious metals are already feeling the pinch late in today‘s premarket trading, but there is no sending them to bear markets. Get ready for the twin scourge of persistent inflation and slowdown in growth to start biting increasingly more – just-in producer price index (9.6% YoY, largest ever) confirms much more inflation is in the pipeline, and the Fed would still remain behind the curve in its actions. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 had a weak day, but the dip was being bought – there is fledgling accumulation regardless of deteriorating internals, and tech selloff continuing. Credit Markets HYG even staged a late day rally – bonds are in a less panicky mood, not anticipating overly hawkish Fed message. And that‘s good for the markets that sold off a bit too much. Gold, Silver and Miners Precious metals downside appears limited here, and today‘s premarket downswing has been largely erased already. Much catching up to do on the upside, just waiting for the catalyst. Crude Oil Crude oil is on the defensive now – the weak session yesterday didn‘t convince me. I‘m though still looking for higher prices even as today‘s premarket took black gold below $70. Still not looking for a flush into the low or mid $60s. Copper Copper upswing didn‘t materialize, and worries about the economic outlook keep growing. The sideways trend keeps holding for now though, still. Bitcoin and Ethereum Bitcoin and Ethereum bottom searching goes on, yesterday‘s downside target was hit, but the bottom (at $46K BTC or $3700s ETH) might not be in just yet. Cryptos remain in wait and see mode. Summary Bears aren‘t piling in before today‘s FOMC – the Fed‘s moves will though likely be interpreted as not overly hawkish. Given more incoming signs of slowing economy, the window of opportunity to tighten, is pretty narrow anyway. Why take too serious a chance? Yes, I‘m looking for the weakness in real assets to turn out temporary, and for stocks not to be broken by inflation just yet – as argued for in the opening part of today‘s analysis. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Bear - A Second Symbol Of Markets? What Does Bear Market Mean?

The Bear’s crypto market

Alex Kuptsikevich Alex Kuptsikevich 14.12.2021 09:20
The cryptocurrency market came under impressive pressure on Monday afternoon, taking 6% off its total capitalisation to 2.12 trillion. The Fear and Greed Index for the sector returned to the extreme fear territory, dropping from 28 to 21. It is not easy to pinpoint the new wave of pressure trigger, but it intensified and widened after the two largest cryptocurrencies gave up their key positions. Bitcoin has fallen below its 200-day average, trading below $47K at the time of writing. Excluding the intraday drop on the 6th of December, these are the lowest values since early October, and bitcoin has lost a third of its value from its peak levels just over a month ago. By and large, the highs at 69k were the starting point for pressure on the BTCUSD. Should the decline develop, it is worth paying increased attention to the 40k and 30k levels, significant round levels where Bitcoin had previously turned to the upside. The ETHUSD decline below 4,000 has intensified the sell-off. The pullback now exceeds 23% of the peak, signalling the start of a bear market. ETHUSD’s previous deep correction earlier this year only halted after a 60% loss, taking the price back from $4400 to the $1700 area. Should upward pressure develop, the intensity of the tug-of-war between bulls and bears could increase near the $3300, $2700, and $1800 levels, which acted as turning points earlier this year. The whole crypto sphere is in a Bear market. Their total capitalisation is already more than 30% lower from their peaks, and attempts to consolidate beyond critical levels have failed. Last summer, cryptocurrency investor interest returned after capitalisation fell by more than half. This suggests the potential for a further 30% decline from current levels.
SEC Rejects Valkyrie, Kryptoin Spot Bitcoin ETF Applications

The crypto market is melting before our eyes

Alex Kuptsikevich Alex Kuptsikevich 20.12.2021 08:53
The crypto market's capitalisation has fallen 2.8% in the last 24 hours to $2.166 trillion. Methodical pressure on the significant coins persists along with wary trading in traditional equity markets. The bitcoin price has been losing 2.5% in the last 24 hours and is 5.6% lower than it was exactly a week ago. Ether is down 3.4% and 4%, respectively. Some other top coins are also under severe pressure, but we cannot say that the dynamics are unambiguous. For example, XRP is up 5.5%, AVAX is up 22%, and Luna is up 30.7% in the last seven days. At the beginning of the year, institutional and investment bank interest provided cryptocurrencies with overperformance but now lowered demand for safety is becoming their Achilles' heel. The most methodical, albeit relatively measured, pressure has been seen in Bitcoin and Ether, which have been under bearish control for the past month and a half. According to equity and commodity market definitions, BTCUSD and ETHUSD have crossed the bear market threshold, having lost more than 20% of their peaks in early November. Bitcoin, meanwhile, is not gaining meaningful support on the decline towards the 200-day average. These are all signs that the bear market is entering its rights, as enthusiasts can no longer buy out any drawdowns. Generally speaking, a modest downside amplitude is not typical of cryptocurrencies, so short-term traders should be prepared for an explosion of volatility on a decline below meaningful levels. We assume that crucial support is concentrated near $40K for Bitcoin, a resistance level in January and a support level in October. Falling below this level could dramatically increase the coin's volatility and affect the entire market. For Ether, relatively measured volatility could continue up to the level of the 200-day moving average (just above 3300), which coincides with the area of extended consolidation in August and September and the start of the latest rally in October. Suppose Ether and Bitcoin fail to find strong buying below these levels as well. In that case, we risk seeing a true capitulation of the entire cryptocurrency market and a revision of the outlook to a more bearish one.
Bitcoin Weekly Forecast: BTC to provide the biggest buying opportunity before $100,000

Bitcoin Weekly Forecast: BTC to provide the biggest buying opportunity before $100,000

FXStreet News FXStreet News 17.12.2021 14:41
Bitcoin price is in a massive accumulation phase before it explodes to $100,000 or more. The bull run is likely to begin after a deep correction to MicroStrategy’s average buy price at $29,860. On-chain metrics suggest that long-term holders are booking profit, adding a tailwind to the bearish thesis. Bitcoin price has been hanging around the $50,000 psychological level for quite some time. A breakdown of one crucial support barrier is likely to trigger a steep crash for BTC. On-chain metrics are also suggesting that long-term holders are booking profits, anticipating a nosedive. Bitcoin price and MicroStrategy’s accumulation Bitcoin price has been stuck between the 21-week Simple Moving Average (SMA) at $51,782 and the 50-week SMA at $44,730 for roughly two weeks. Although BTC pierced through the 50-week SMA on December 4 crash, it recovered quickly. As the sell-off continues, the big crypto is slowly slithering its way to retest the vital support level. A weekly close below the 50-week SMA at $44,730 will indicate a major shift in trend from bullish to bearish. This development would also signal that Bitcoin price is due to collect liquidity resting below the $40,596 support level. While this liquidity run might knock BTC below $40,000, it is a temporary move. In the long run, investors can expect the pioneer crypto to consolidate here before heading to $30,000 or the liquidity resting below it. Interestingly this downswing is necessary to trigger the stop-losses resting below a critical $29,860 level, which is the average buy-in price of MicroStrategy. To date, the business intelligence software company has purchased 122,477 BTC, which is 0.53% of the total BTC in existence. The total value of Bitcoins held by MicroStrategy is worth $5.76 billion, which indicates a profit of roughly 56%. It is fair to assume that many whales or long-term holders that are betting on BTC have an average price at roughly the same level as MicroStrategy or a bit lower. Therefore, a dip below the average price of MicroStrategy at $29,860 will indicate a ‘max pain’ scenario and is likely to be where many investors may panic and sell to prevent losses. Market makers are likely to drive Bitcoin price to retest this barrier, therefore, or just below it. While this outlook is speculative, it would make sense for BTC, especially from a market makers’ perspective due to the supply resting below the multiple wicks present around the $30,000 psychological level. In total, this move would represent a 36% crash from the current position. Although unlikely, a worst-case scenario would be for BTC to fall by 48%, allowing it to retest the 200-week SMA at $23,935. BTC/USD 1-week chart IntoTheBlock’s Global In/Out of the Money (GIOM) model reflects the levels mentioned above. This on-chain index shows that the immediate cluster of investors that are “In the Money,” extends from $28,350 to $46,636. Roughly 5.23 million addresses purchased 3.13 million BTC at an average price of $38,283. Therefore, a weekly close below this level will cause panic selling among investors that could drag the big crypto down to sub-$30,000 levels. Moreover, any short-term buying pressure is likely to face massive headwinds as a massive cluster of underwater investors are present from $55,302 to $67,413. In this range, roughly 6.65 million addresses that purchased 3.37 million BTC are “Out of the Money.” Only a massive spike in buying pressure will be able to overcome the selling pressure from investors in this cluster trying to break even. Hence, the logical conclusion is that the outlook for BTC favors the bears. BTC GIOM The supply shock chart supports the bearish outlook for Bitcoin. It shows that the long-term holders are booking profits. Willy Woo, a popular analyst stated, long term holders have been selling down and taking profits, but as a cohort they continue to be in a region of peak accumulation. Bear markets coincide when these holders have divested of their coins, despite the fear in the market, structurally we are not setup for a bear market. BTC supply shock chart Further supporting a sell-off is the 0.83% decline in the number of whales holding between 100 to 100,000 BTC. Roughly 136 whales have offloaded their positions as seen in the supply shock chart above. BTC whale distribution chart The only chart that shows hope and presents the possibility of a short-term bullish outlook is the Market Value to Realized Value (MVRV) model, hovering around -1.8%. This on-chain metric is used to determine the average profit/loss of investors that purchased BTC over the past year. A negative value represents that short-term holders are selling and is often referred to as the “opportunity zone.” This is where mid-to-long-term holders accumulate. So, there is a chance that BTC might see a potential buying spree that pushes it to retest the 21-week SMA at $51,776 or reach for the $57,845 resistance barrier, in a highly bullish case. BTC 365-day MVRV While the scenario outlined above is undoubtedly bearish for short-term holders, it will provide long-term investors with a perfect buying opportunity. A retest of MicroStrategy’s average buy price at $29,860 will be where investors can expect a reversal of the downswing. The resulting uptrend will likely propel Bitcoin price to a new all-time high at $100,000. However, if Bitcoin price decides to skip the crash and produces a weekly close above the current all-time high at $69,000, then it will invalidate the bullish thesis. In such a case, investors can expect BTC to head to other psychological barriers like $70,000 or $80,000.
Book Review: Safe Haven

Book Review: Safe Haven

David Merkel David Merkel 25.09.2021 05:53
Picture Credit: Wiley Publishing || Ah, the golden umbrella! This is a tough book to review. I don’t like the writing style — it is pompous, and drags you through a variety of “rabbit trails” that aren’t necessary to the core ideas of the book. Simplicity is beauty, so going on a travelogue of your philosophical interests detracts from the presentation of this book. As I have often said, the book needed a better editor who could overrule the author and say “That’s not relevant.” “That’s boring.” “Get to the point.” and “This is thin gruel.” Quoting from pages 4-5: ‘As this book is, in part, a response to those questions, I do want to ensure that expectations are set  appropriately  at  the start. This is not a “how-to” book, but it is a “why-to” as well  as a “why-not-to” book. Let’s be clear: What I do specifically as a safe haven  investor  is not  to be attempted  by  nonprofessionals (nor-perhaps  even especially-by  most professionals). Nothing that I could tell you in a book will change that. So, I will not be holding your hand and teaching you how to do it; I will not be revealing much in the way of trade secrets, and I have no interest in selling you anything as an investment manager. This book is not about the workings of a specific safe haven strategy, per se; nor is it an encyclopedic survey of all the major safe haven investments. Moreover, it has little if any current market commentary-as this would be entirely unnec­essary to the book’s point.‘ As such, the author talks in generalities, and does not give away his strategy. Do I blame him? No. I don’t blame him for not giving away his strategies. I do blame him for writing this book. Better to not write a vague book that is of no practical use to most who read it. Modeling Issues Then there are the modeling issues — a decent part of the book assumes that yearly returns are essentially random. Market returns are regime-dependent. There is momentum. There is weak mean reversion. The results in prior years affect the current year, both positively and negatively. Toward the end of his analysis the author recognizes the problem and then uses 25-year blocks of S&P 500 returns 1900-2019 (or so), without noting that it gives undue weight to the years in the middle that get oversampled. The grand problem is that we only have one history — and is it normal or an accident? We assume normal, but how can we know? Also, though we have 120 or so reliable years of performance for the pseudo-S&P 500, for options on the S&P 500, we only have ~35 years of data. For more esoteric diversifying investments, we have 10-40 years of data. We have no strong data on how they might have performed prior to their inception. Also, their modern presence may have affected the performance of the S&P 500. Simulation analyses have to be done ultra-carefully. It’s best to develop an integrated structural model, deciding what variables are random and how they correlate with each other. Then use pseudo-random multivariate values for the analysis. I used these to great value to my employers 1996-2003 when I was an investment actuary. What I Liked But I like the book in some ways. He makes the important point that hedging when the cost of the hedge is fair or even in your favor is an advantage. And this is well known by regulated financial companies. There are two ways to win. 1) Source liabilities at favorable terms. 2) Buy assets on favorable terms. This book is about the first idea: insure your portfolio when it pays to do so. Happily, the insurance costs the least during bull markets, when everyone is hyperconfident. It costs the most during bear markets, where everyone is hyper-scared. So hedge more when it is cheap, and less when it is expensive. Simple, huh? But the book leaves this idea implicit. It never states it this plainly. Second, I like his idea that the safest route is the one that maximizes expected wealth over time. That is underappreciated by asset managers. Third, I appreciate that he brings in the Kelly Criterion, which is one of the best ways to deal with the risk-reward question, which in this case, is how you size your hedges. Finally, he talks about maximizing the fifth percentile of likely outcomes, which in a well-structured model will keep the investor in the game, allowing the investor to cruise through bear markets, and stay invested. Hey, many actuaries have been doing that for life insurers over the last 25 years. Welcome to the club. The Central Conundrum He classifies his hedges as store-of-value, alpha, and insurance. Store of value is short-term savings that has no possibility of loss, which oddly he has at 7%/yr. That might be a long term average, or not, but when modeling the future, variables have to be forward-looking. There is no sign of 7% on the horizon at no risk. He includes gold in this bucket, and thinks it is a genuine diversifier, with which I agree. Then there is alpha, which for him is commodity trading advisors who are trend followers, who do well when volatility is high. He also briefly touches on a variety of investments that he has tested, and finds they don’t aid the growth of terminal net worth on average. Then there is insurance, which he never spells out exactly what it is, and the author says it is the most effective way to hedge, and profit. He hides his trade secrets. What he should have told you I will reveal here. The insurance he is probably talking about is put options on stock or corporate bond indexes (particularly high-yield), or paying for protection on indexed credit-default swaps (best, but only institutions can do this). Imagine paying a constant percentage portfolio value by period to protect your portfolio. When valuations are high, implied volatility is low, and the insurance is cheap when you need it. When valuations are low, implied volatility is high, and the insurance is expensive when you don’t need it. In that situation, your existing hedges might have appreciated so much that you sell them off and go unhedged. Implied volatility can only go so high, before it mean-reverts. When option prices get high, potential hedgers and speculators who would be option buyers sit on their hands, and don’t do anything. Quibbles Already stated. Summary / Who Would Benefit from this Book If you have read this book review, you have learned more than the book will give you. I really don’t think many people will learn much from this book. Full disclosure: The publisher kind of pushed a free copy on me, after I commented that I wasn’t crazy about the author’s last book.
Bitcoin (BTC) On-Chain Analysis: NVTS and SSR Signal Bullish Reversal

Bitcoin (BTC) On-Chain Analysis: NVTS and SSR Signal Bullish Reversal

BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. BeInCrypto (BeIn News Academy Ltd), we're writing about crypto. 23.12.2021 12:13
Today’s on-chain analysis for Bitcoin looks at two independent indicators that seem to be generating the same bullish reversal signal. Their confluence could soon lead to a macro bottom for the BTC price. The first is the NVT Signal, which is an equally old and effective on-chain indicator. It has proven particularly effective when it has reached the “oversold” territory that has historically correlated with Bitcoin macro lows. The second is SSR, which measures the purchasing power of stablecoins against BTC. It has reached an all-time low during this correction, and the purchasing power of stablecoins is approaching record highs. Bitcoin NVTS reaches oversold level NVT Signal (NVTS) is a modified version of the original NVT Ratio indicator. The latter is calculated by dividing market capitalization by transferred on-chain volume measured in USD. In contrast, NVTS uses a 90-day moving average of daily transaction volume in the denominator instead of raw daily transaction volume. This improves the reading to better function as a leading indicator. The long-term NVTS chart shows the importance of the area near the 17.5 value (red line) from which the indicator has just bounced. This area provided support during the 2021 summer correction. It had previously reached exactly the same level during the COVID-19 crash in March 2020 and at the very bottom of the bear market in December 2018. NVTS chart by Glassnode Interestingly, the same area around 17.5 acted as resistance multiple times in 2015. Even before that, just before the second phase of the violent bull market of 2013, NVTS also found support. One of the most popular on-chain analysts, @woonomic, calls NVTS the “granddaddy” of on-chain indicators, but insists that it “still works.” In a recent tweet, he pointed out that historically it hasn’t given a very frequent reading of being “oversold” on a chart he designed himself. All the periods when NVTS fell to support (light pink) coincided with BTC price lows (green area). Source: Twitter Stablecoin buying power is increasing If NVTS is indeed currently giving a bullish signal and the Bitcoin price correction were to end soon, the price of BTC should be expected to rise. For this to happen, funds must flow into the market with which potential purchases could be made. Last week, BeInCrypto’s on-chain analysis highlighted a Stablecoin Supply Ratio (SSR) that was approaching the all-time low (ATL). Today, in fact, the SSR is at a record low (green area). This means that the purchasing power of stablecoins (USDT, TUSD, USDC, USDP, GUSD, DAI, SAI, and BUSD) is increasing relative to BTC. SSR chart by Glassnode Furthermore, we notice two (non-ideal) trend lines on the chart. The green uptrend line relates to the BTC price, which has been rising since the March 2020 bottom. The red downtrend line relates to the SSR and has been in place since July 2019. Note that its decline indicates an increase in stablecoin purchasing power. If the positive correlation between the increasing purchasing power of stablecoin and the price of BTC is maintained, we can expect the two trends to continue. The importance of the green area in the chart above is also highlighted by the analogous stablecoin buying power chart prepared by two on-chain analysts @_checkmatey_ and @permabullnino. In the long-term chart, we see green bars that indicate areas where stablecoin purchasing power has been increasing. We have highlighted periods of strong growth in this trend in purple to show the correlation with the BTC price. This turns out to be negative. Periods of a strong rise in stablecoin purchasing power have historically coincided with clear corrections in the Bitcoin price. Source: CheckOnChain This is no different during the current correction, which points to the second-largest increase in the purchasing power of stablecoins. The current trend is second only to the deeper correction of May-July this year. The juxtaposition of the two indicators of today’s on-chain analysis gives a strong indication in favor of the thesis that bitcoin is in the process of reaching a macro bottom. Historically, both indicators at their current values have been bullish signals, after which the Bitcoin price rose dynamically. For BeInCrypto’s latest Bitcoin (BTC) analysis, click here. The post Bitcoin (BTC) On-Chain Analysis: NVTS and SSR Signal Bullish Reversal appeared first on BeInCrypto.
Miners Should Prepare a Pillow: Gold's Hard Landing Can Hurt

Miners Should Prepare a Pillow: Gold's Hard Landing Can Hurt

Przemysław Radomski Przemysław Radomski 07.01.2022 15:54
  As in sports, a weak market streak can reverse in the next season. However, the precious metals team looks like it’s about to drop out of the league. While gold, silver, and mining stocks were in the holiday spirit during the final weeks of 2021, I warned on Jan. 4 that the GDXJ ETF’s sleigh was headed for an epic crash. I wrote: The GDXJ ETF’s corrective upswing has likely run its course. Interestingly, the junior miners’ current rally mirrors the small correction that materialized in mid-2021 (early August). Back then, the GDXJ ETF rallied on low volume and didn’t recapture its 50-day moving average. With the same tepid strength present today, the drawdown that followed in mid-2021 will likely commence once again. On top of that, the behavior of the GDXJ ETF’s RSI is also similar – with the indicator moving from roughly 30 to 50. For context, I highlighted the similarities with green and purple ellipses below. Also noteworthy, similar developments occurred in February/March 2020, before the profound plunge unfolded. As a result, the GDXJ ETF looks set for another sharp drawdown over the medium term. After the junior mining stocks ETF proceeded to decline by more than 6% in two days, my short position rang in the New Year with solid gains. What’s more, with the GDXJ ETF likely to break below its 2021 lows over the medium term, winter woes should materialize before a long-term buying opportunity emerges. Please see below: Likewise, with the GDX ETF’s RSI (Relative Strength Index) signaling an ominous outcome for the senior miners, I warned that a sell-off was likely on the horizon. For context, I highlighted the historical similarities with the blue vertical dashed lines below. Moreover, with the GDX ETF’s weakness accelerating on Jan. 5/6, the senior miners have declined sharply in recent days. In addition, the current price action mirrors the senior miners’ ominous performance in July/August 2021 – just like I’ve been describing it for a few weeks now. As a result, the previous corrective upswing is likely over, and the GDX ETF should confront lower lows sooner rather than later. For context, a breakdown below the 2021 lows should materialize over the medium term, and the forecast for gold, as well as gold stocks, is bearish for the next several weeks / months. However, the milestone may not occur over the next few days. Turning to the HUI Index’s long-term chart, the same bearish signals are present. For example, I marked the specific tops with red and black arrows. In the current situation, we saw yet another small move up, but that’s most likely because the price moves are now less volatile. The areas marked with red ellipses remain similar and show back-and-forth movement before the big decline. As such, while we’ve entered a consolidation phase, this week’s selling pressure has been quite ferocious. Thus, the implications are not bullish but bearish. Finally, the GDX/GDXJ ratio continues to perform as expected. For example, I warned throughout 2021 that the ratio was destined for devaluation. ith the metric kicking off 2022 with another decline, the GDXJ ETF continues to underperform the GDX ETF. For context, I believe that gold, silver, and the GDX ETF are all ripe for sharp re-ratings over the medium term. However, I think that the GDXJ ETF offers the best risk-reward ratio due to its propensity to materially underperform during bear markets. As a result, shorting junior miners offers a great risk to reward trade-off. In conclusion, gold, silver, and mining stocks began 2022 with the same weakness that plagued them in 2021. While the worst performers one year often become the best performers the next, the charts signal more weakness ahead. As a result, while the precious metals are poised to soar over the long term, lower lows will likely materialize before their secular uptrends resume. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFAFounder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care * * * * * All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Bitcoin (BTC) and crypto in general became even more appealing recently

Bitcoin (BTC) and crypto in general became even more appealing recently

Alex Kuptsikevich Alex Kuptsikevich 10.01.2022 10:37
The cryptocurrency market received moderate support from retail buyers over the weekend. Over the past 24 hours, the capitalisation of all coins rose 0.22%, according to CoinMarketCap, approaching $1.97 trillion. The top altcoins lost 11-19% over 7 days but found buyers over the weekend. The $2 trillion mark in total crypto valuation turned into local resistance last week, from where pressure has intensified. However, a strong buy-the-deep mood has kept the market from forming a downward spiral. The cryptocurrency Fear & Greed Index was stuck at 23 over the weekend, indicating extreme fear. The index has been hovering at the lower half of the scale since November 18th. Optimists, however, may note that the indicator has bounced back from the 10 level. The dip here in May and July coincided with the lows within the impulse, hinting at the potential for some technical rebound. Technical analysis also suggests a rebound in BTCUSD, with the RSI on daily charts showing attempts to move up from the oversold area below 30 and the price hovering near the reversal area in September. A longer-term view of the cryptocurrency market makes one more cautious about its prospects. Bitcoin has been in a downward corridor since November last year, having fallen to its lower boundary by the end of last week. Local overselling is a chance for a rebound, but the overall trend is still downwards. Cryptocurrency investors should not dismiss the idea of 4-year cycles in Bitcoin affecting the entire sector just yet. According to this hypothesis, 2022 could turn out to be a repeat of 2018 and 2014 - bear market years after a surge in the previous two years. Thus, it is worth paying increased attention to whether the crypto market manages to return to growth in the coming days and weeks. A strong start to the year will put these fears to rest.
Dogecoin (DOGE) allowed by Tesla (TSLA) in some way. BTC and ETH with decreases

Dogecoin (DOGE) allowed by Tesla (TSLA) in some way. BTC and ETH with decreases

Alex Kuptsikevich Alex Kuptsikevich 14.01.2022 10:05
Pressure on US tech stocks was a significant theme in US trading yesterday, dragging cryptocurrencies down. The Crypto market capitalisation adjusted 1.1% overnight to $2.05 trillion. Bitcoin is losing 2% overnight, down to $42.8K, and ether is losing about 1.5% to $3.3K. Other top coins are declining with much less amplitude, as investment fund darlings rather than crypto enthusiasts have been hit the hardest. The Doge, which has become accepted as a means of payment for some (inexpensive) Tesla goods, deserves a separate story. Some have noted that goods for Doge are selling out even faster than for dollars. On this news, the coin is adding 18% today at $0.20, near the highs for the month. This news is a good illustration of crypto's continued penetration of corporate culture. On the other hand, Tesla won't necessarily hold these coins forever. People will be more active in spending their investments in DOGE. The technical view of the ETHUSD is disappointing because the selling intensified earlier in the week while it tried to break the 200 SMA again. The dip and consolidation below suggest a break of the bullish trend formed in May 2020, when the pair consolidated above this line. In a worst-case scenario, it could be a road to $1300-1700, about half of the current levels. It is doubtful that in this bear market cycle, the price of ether will lose 95% of its peak, as it did in 2018, which could completely nullify the rise from 2020. Bitcoin's disposition is no less worrisome. A death cross forms in it as the 50-day dips below the 200-day. At the same time, the price is below these averages, which reinforces the bearish signal. Attempts earlier in the week to form a rebound are encountering more substantial selling, further indicating seller pressure. The bearish picture in Ether and Bitcoin makes the entire cryptocurrency sector appear cautious in the near term. Individual growth stories, like DOGE, run the risk of quickly losing strength today when the overall backdrop turns negative.
S&P 500 – Should We Buy the Dip?

S&P 500 – Should We Buy the Dip?

Paul Rejczak Paul Rejczak 21.01.2022 15:38
  The S&P 500 index broke below its early December low. Are we in a new bear market or is this still just a downward correction? The broad stock market index lost 1.10% on Thursday following its Wednesday’s decline of around 1%. The S&P 500 index fell below the 4,500 level and it was the lowest since mid-October. Investors reacted to quarterly earnings releases and further Russia-Ukraine tensions. Late December – early January consolidation along the 4,800 level was a topping pattern and the index retraced all of its December’s record-breaking advance. This morning the market is expected to open 0.4% lower and it will most likely extend the downtrend. The nearest important resistance level is now at around 4,500-4,525, marked by the recent support level. On the other hand, the support level is now at around 4,450. The S&P 500 broke below an over month-long upward trend line this week, as we can see on the daily chart (chart by courtesy of http://stockcharts.com): Futures Contract Broke Below its Previous Lows Let’s take a look at the hourly chart of the S&P 500 futures contract. The market broke below its previous local lows along the 4,520 level. There was a chance that entering a long position would be justified here, but any short-term bullish scenario seems invalidated now. On the other hand, it may be too late to enter a short position right now, because of some clear technical oversold conditions. (chart by courtesy of http://tradingview.com): Conclusion The S&P 500 index is expected to open 0.4% lower this morning, so it will likely extend a short-term downtrend. We may see another intraday rebound, but there have been no confirmed positive signals so far. Yesterday we’ve seen a convincing rally, but it failed and the market sold off to new lows. The coming quarterly earnings releases (next week we’ll have MSFT, AAPL, TSLA among others) remain a bullish factor for stocks, but there is still a lot of uncertainty concerning Russia-Ukraine tensions. Here’s the breakdown: The S&P 500 reached yet another new low yesterday and it was the lowest since mid-October. Stocks will most likely bounce at some point, but any rally may be short-lived. In our opinion no positions are currently justified from the risk/reward point of view. Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Paul Rejczak,Stock Trading StrategistSunshine Profits: Effective Investments through Diligence and Care * * * * * The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
A Look At Markets Around The World: US CPI, Sweden Riksbank EU Yields And More

Getting Long in the Tooth

Monica Kingsley Monica Kingsley 02.02.2022 15:56
S&P 500 recoverd the opening setback at 4,500, and the low volume behind the upswing coupled with credit market reversal shows that the push towards 4,600 is next – but it would be fraught with internal vulnerability. It‘s that value has welcomed the risk-on turn while tech barely prevented lower values – the bond reprieve won‘t last, and is providing more fuel behind the commodities push higher, and precious metals recovery. The Kashkari effect and good ISM Manufacturing PMIs have worked fine, but the services data awaits. And I‘m looking at it to throw a spanner in the works, a modest one. For now, controlling the overall risk is key – fresh portfolio highs were achieved yesterday as new S&P 500 long profits were taken off the table – and commodities with precious metals are likely to do well in this extended (sticking out like a sore thumb) rally off oversold levels (in tech). The other key thought expressed in the linked tweet is that S&P 500 hasn‘t entered a bear market, that it hasn‘t rolled over to the downside for good. It‘s that I expect the return of the bears in the not too distant future, and a smoother sailing in 2H 2022. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 bulls prevailed, but the question still remains – where would the upswing stall, or at least pause? Still the same answer as yesterday - ahead soon, still this week. Credit Markets HYG reversed higher, and the pace of its coming gains, would be valuable information. Volume tells a story of a modest setback only thus far – greater battles await. Gold, Silver and Miners Gold and silver staircase recovery goes on, showing that further retreat was indeed unlikely. The long consolidation would be resolved in a bullish way, it‘s only a question of time. Great performance this early in the tightening cycle – look for PMs upswings once the rate hikes get going. Crude Oil Crude oil bulls aren‘t wavering as the whole energy sector attests to. Black gold hasn‘t dipped yet below $86, and keeps marching and leading the other commodities $100 is approaching. Copper Copper‘s recent red flag was indeed dealt with decisively, and higher prices prevailed. Still great room to catch up with the rest after the preceding reprieve across other base metals as well. Bitcoin and Ethereum The narrow crypto trading range continues – I‘m still not looking at the Bitcoin and Ethereum buyers to succeed convincingly. Time for a downside reversal is approaching – will happen just when Ethereum loses the bid. Summary S&P 500 bulls again scored gains yesterday, but the sectoral rotation and credit market turn would build a vulnerability going into Friday when value would suffer. Before that, I look for the bears to gradually start appearing again, taking probing bites, but not yet being decisive. VIX has some more room to decline indeed, confirming my earlier thoughts – the volatility return would happen on non-farm payrolls inducing a fresh guessing game as to the Mar rate hikes – 25 or 50bp? Inflation, precious metals and commodities would though still emerge victorious. For now, overall risk management is key – fresh portfolio high was reached yesterday. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
(FB) Meta Shares Decreases by 20%, Netflix (NFLX) Shares Goes Down As Well (-30%)

(FB) Meta Shares Decreases by 20%, Netflix (NFLX) Shares Goes Down As Well (-30%)

Alex Kuptsikevich Alex Kuptsikevich 03.02.2022 14:47
Meta (FB) shares lost around 20% post-market, which appears to be an overreaction and shows how wary buyers have become of the former growth leaders, the so-called FAANG stocks. The sharp declines of former crowd favourites could result from a reassessment of the medium-term outlook, for example, due to changes in monetary policy. But they could also be the next domino effect in an impending bear market. Netflix shares lost more than 30% in a few days following a disappointing report late last month and fell 50% from their peak in late November before fumbling for support from bargain hunters. PayPal was not technically in the FAANG big league but was punished just as much, losing around 25% intraday yesterday. After Facebook, Snap (-15%) and Twitter (-7%) also took a tangential hit. In our view, these are not isolated corporate stories but manifestations of broader underline currents. And in the coming days, we will have to determine whether we see a change in the bull market leaders or the first signals of a prolonged bearish trend. In a bear market, the weakest stars are the first to fall, and then the vortex of decline attracts more and more strong participants. The first domino is meme stocks, which had fallen methodically since June when the first signals emerged that the Fed was starting to prepare the markets for a wind-down. Then we saw a peak in many high-tech stocks in November when the Fed started cutting back on buying. By this logic, the downward spiral could pull more strong stocks into a downward spiral by the time interest rates rise, which is expected in March. Looking more broadly at the Nasdaq100 index, there is a rather worrying tech analysis picture. It is once again below its 200-day moving average. The high-tech-filled Meta retreated 2.4% after the report. The S&P500 and DJIA, however, look noticeably stronger on the technical analysis side. But it is worth watching closely how the trading will go this week and whether the buyers will reverse the negative trend of the former Nasdaq favourites. If so, we see a change in the leaders in the form of a rotation in value stocks and other names affected by the pandemic. But fears that the Fed is preparing to take money out of the financial system could force market players to take money off the table by selling blue chips.
Deer in the Headlights

Deer in the Headlights

Monica Kingsley Monica Kingsley 03.02.2022 15:56
S&P 500 is slowly getting under pressure, which is likely to culminate on weak non-farm payrolls tomorrow if Wednesday was any guide. Credit markets are pushing for higher yields as inflation data keep surprising those policy makers who had been already surprised throughout 2021. Commodities though aren‘t freezing as a proverbial deer in the headlights, and once the scare of the Fed‘s short tightening cycle gets done away with, precious metals would join. In the meantime, look for silver to act on copper‘s cue, and for gold to do relatively better in risk-off settings.As for stocks, my gentle selling bias while on the lookout to enter short towards the session‘s end, hasn‘t changed since yesterday, and the new position is already profitable:(…) the low volume behind the upswing coupled with credit market reversal shows that the push towards 4,600 is next – but it would be fraught with internal vulnerability. It‘s that value has welcomed the risk-on turn while tech barely prevented lower values – the bond reprieve won‘t last, and is providing more fuel behind the commodities push higher, and precious metals recovery.The Kashkari effect and good ISM Manufacturing PMIs have worked fine, but the services data awaits. And I‘m looking at it to throw a spanner in the works, a modest one. For now, controlling the overall risk is key – fresh portfolio highs were achieved yesterday as new S&P 500 long profits were taken off the table – and commodities with precious metals are likely to do well in this extended (sticking out like a sore thumb) rally off oversold levels (in tech). The other key thought expressed in the linked tweet is that S&P 500 hasn‘t entered a bear market, that it hasn‘t rolled over to the downside for good. It‘s that I expect the return of the bears in the not too distant future, and a smoother sailing in 2H 2022.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 bulls prevailed yesterday, but would get under pressure relatively soon. The ominous lower knots say a consolidation is knocking on the door.Credit MarketsHYG repelled selling pressure, but that won‘t last – I‘m looking for lower values across the bond spectrum, coinciding with (temporary) dollar upswing. Risk-off.Gold, Silver and MinersAll this risk-off already in and still to come, is failing to press gold and silver really down – and that tells you the true direction is up, just waiting for a (Fed, inflation, stagflation) catalyst.Crude OilCrude oil bulls aren‘t yet wavering, but remain perched pretty high – I‘m looking for sideways to down consolidation as the bears get emboldened by the rising volume. Trying their luck soon.CopperCopper is back to the middle of its recent range, still positioned for an upside breakout. Commodities are pointing in the right direction – note the absence of sellers yesterday. How far would the USD upswing compress the red metal today? Not much, not lastingly.Bitcoin and EthereumThe narrow crypto trading range is over, and the bears are on the move – look for them to take some time before they get going towards BTC $35K.SummaryS&P 500 bulls are about to meet the bears again, and higher yields won‘t save value stocks, let alone spawn a rush to tech safety. The pressure in stocks to probe lower values, is building up, and 4,450 may not be enough to stop it. For all the pause in Fed hawkish jawboning, the tightening cycle is merely getting started, and stocks will feel it. Unlike precious metals, which would reverse prior hesitation once the rate raising starts in earnest, and start going up. And commodities? These aren‘t waiting for anyone‘s greenlight. And neither should you in life – what I would like to bring to your attention, is that volatility is rising, and it thus makes sense to pare back the overall portfolio exposure and position sizing while taking only the strongest of opportunities.Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Bear - A Second Symbol Of Markets? What Does Bear Market Mean?

Bear - A Second Symbol Of Markets? What Does Bear Market Mean?

Binance Academy Binance Academy 07.02.2022 07:50
Introduction Financial markets move in trends. It’s important to understand the differences between these trends to be able to make better investment decisions. How come? Well, different market trends can lead to wildly different market conditions. If you don’t know what the underlying trend is, how are you going to adapt to changing conditions? A market trend is the overall direction that the market is going. In a bear market, prices are generally declining. Bear markets can be a challenging time to trade or invest in, especially for beginners.  Most crypto traders and technical analysts agree that Bitcoin has been in a macro bull trend throughout its existence. Even so, there have been several relentless cryptocurrency bear markets. These generally bring more than an 80% decline in the price of Bitcoin, while altcoins can easily experience more than 90% declines. What can you do during these times? In this article, we’ll discuss what a bear market is, how you should prepare for it, and how you may be able to profit in it. If you’d like to read about bull markets first, check out What Is A Bull Market?.   What is a bear market? A bear market can be described as a period of declining prices in a financial market. Bear markets can be extremely risky and difficult to trade for inexperienced traders. They can easily lead to great losses and scare investors from ever returning to the financial markets. How come?  There’s this saying among traders: “Stairs up, elevators down.” This means that moves to the upside may be slow and steady, while moves to the downside tend to be more sharp and violent. Why is that? When the price starts crashing, many traders rush to exit the markets. They do that to either stay in cash or lock in profits from their long positions. This can quickly result in a domino effect where sellers rushing to the exit leads to even more sellers exiting their positions, and so on. The drop can be amplified even more if the market is highly leveraged. Mass liquidations will have an even more pronounced cascading effect, resulting in a violent sell-off. With that said, bull markets can also have phases of euphoria. During these times, prices are increasing at an extreme rate, correlations are higher than usual, and a majority of assets are going up in tandem. Typically, investors are “bearish” in a bear market, meaning that they expect prices to decline. This also means that market sentiment is generally quite low. However, this may not mean that all market participants are in active short positions. This just means that they expect prices to decline and may be looking to position themselves accordingly if the opportunity presents itself.   Bear market examples As we’ve discussed, many investors think that Bitcoin has been in a macro bull trend since it started trading. Does that mean there aren’t bear markets contained in that bull run? No. After Bitcoin’s move to around $20,000 in December 2017, it’s had quite a brutal bear market.   Bitcoin price crashes after the 2017 bull market.   And before the 2018 bear market, Bitcoin experienced an 86% drop in 2014.   Bitcoin price crashes 86% from the 2013 top.    As of July 2020, the range of the previous bear market low around $3,000 have been retested but never broken. If that low would have been breached, a stronger argument could be made that a multi-year Bitcoin bear market is still underway.   Bitcoin retesting the range of its previous bear market low.   Since that level has not been broken, the argument can be made that the crash following COVID-19 fears was merely a retest of the range. Still, there are no certainties when it comes to technical analysis, only probabilities. Other notable bear market examples come from the stock market. The Great Depression, the 2008 Financial Crisis, or the 2020 stock market crash due to the coronavirus pandemic are all noteworthy examples. These events have all caused great damage on Wall Street and impacted stock prices across the board. Market indexes such as the Nasdaq 100, the Dow Jones Industrial Average (DJIA), or the S&P 500 index can experience significant price declines during times like these.   Bear market vs. bull market – what’s the difference? The difference is fairly straightforward. In a bull market, prices are going up, while in a bear market, prices fall. One notable difference may be that bear markets can have long periods of consolidation, i.e., sideways or ranging price action. These are times when market volatility is quite low, and there’s little trading activity happening. While the same may be true in bull markets, this kind of behavior tends to be more prevalent in bear markets. After all, prices going down for an extended period isn’t very attractive for most investors. Something else to consider is whether it’s possible to enter a short position on an asset in the first place. If there’s no ability to short an asset on margin or using derivatives, traders can only express a bearish view on the market by selling for cash or stablecoins. This can lead to a longer, drawn-out downtrend with little buying interest, resulting in a slow and uneventful sideways price action.   ➟ Looking to get started with cryptocurrency? Buy Bitcoin on Binance!   How to trade in a bear market One of the simplest strategies traders can use in a bear market is to stay in cash (or stablecoins). If you’re not comfortable with prices declining, it may be better to simply wait until the market gets out of bear market territory. If there’s an expectation that a new bull market may come at some point in the future, you can take advantage of it when it does. At the same time, if you’re long-term HODLing with an investment time horizon of many years or decades, a bear market isn’t necessarily a direct signal to sell. When it comes to trading and investing, it’s generally a better idea to trade with the direction of the market trend. This is why another lucrative strategy in bear markets could be to open short positions. This way, when asset prices are going down, traders can profit off the decline. These can be day trades, swing trades, position trades – the main intention is simply to trade in the direction of the trend. With that said, many contrarian traders will look for “counter-trend” trades, meaning trades that are against the direction of the major trend. Let’s see how that works. In the case of a bear market, this would be entering a long position on a bounce. This move is sometimes called a “bear market rally” or a “dead cat bounce”. These counter-trend price moves can be notoriously volatile, as many traders may jump on the opportunity to long a short-term bounce. However, until the overall bear market is confirmed to be over, the assumption is that the downtrend will resume right after the bounce.  This is why successful traders will take profits (around the recent highs) and exit before the bear trend resumes. Otherwise, they could be stuck in their long position while the bear market continues. As such, it’s important to note that this is a highly risky strategy. Even the most advanced traders can incur significant losses when trying to catch a falling knife.    Closing thoughts We’ve discussed what a bear market is, how traders may protect themselves and profit off bear markets. In summary, the most straightforward strategy is to stay in cash in a bear market – and wait for a safer opportunity to trade. Alternatively, many traders will look for opportunities to build short positions. As we know, it’s wise to follow the direction of the market trend when it comes to trading.
DJI (Dow Jones) And SPX (S&P 500) Are Likely To Recover Slowly

DJI (Dow Jones) And SPX (S&P 500) Are Likely To Recover Slowly

Alex Kuptsikevich Alex Kuptsikevich 09.02.2022 09:26
Stock markets continue their shaky recovery. On Tuesday, intraday trading patterns in US equities point to a buying trend on declines. The S&P500 and Dow Jones indices rebounded from their 200-day simple moving average. Both indices were below those levels in the second half of January. Still, by the beginning of February, they managed to get back above them on the substantial buying activity of the retail investors. Yesterday's stock market dynamics slightly reduced the tension. Increased buying at the end of the session indicates a buying mood for professional market participants. There have been increasing reports from US investment banks that markets have already priced in a tight monetary policy scenario and will not press equity prices further. Moreover, BlackRock recently noted that markets had priced in overly hawkish expectations. The bond market also looks oversold, declining in previous weeks at the fastest pace since 2008. This is a good reason, at least for a technical rebound. In addition, buyers are supported by strong economic and wage growth, promising corporate earnings stability for the foreseeable future. The switch to a monetary tightening phase turns the market into a more frequent and deeper corrective pullback mode but does not trigger a bear market before a rate hike even begins. Strong fundamentals support a bullish technical picture, with a recovery from the strongest oversold S&P500 RSI and the ability to pop above the 200-day average. From this perspective, the January drawdown has cleared the way for growth, recharging buyers. On an equity level, we can see stabilisation and sharp upward moves in stocks that have been weak since June and shone in the pandemic before that: Peloton, Netflix, GameStop. In theory, this could be a dead cat bounce, but it reduces the selling pressure in blue-chip stocks such as Apple, Amazon, Microsoft, Google and straightens out the overall market sentiment.
The Question Is How Will Price Of Gold Act In Times Of ECB Meeting

The Question Is How Will Price Of Gold Act In Times Of ECB Meeting

Arkadiusz Sieron Arkadiusz Sieron 10.02.2022 16:22
  Lagarde opened the door to an interest rate hike, which gave the European Central Bank a hawkish demeanor. Does it also imply more bullish gold? The ECB has awoken from its ultra-dovish lethargy. In December 2021, the central bank of the Eurozone announced that its Pandemic Emergency Purchase Program would end in March 2022. Although this won’t also mean the end of quantitative easing as the ECB continues to buy assets under the APP program, the central bank will be scaling down the pace of purchases this year. Christine Lagarde, the ECB’s President, admitted it during her press conference held last week. She said: “We will stop the Pandemic Emergency Programme net asset purchases in March and then we will look at the net asset purchases under the APP.” She also left the door open for the interest rates to be raised. Of course, Lagarde did not directly signal the rate hikes. Instead, she pointed out the upside risk of inflation and acknowledged that the macroeconomic conditions have changed: We are going to use all instruments, all optionalities in order to respond to the situation – but the situation has indeed changed. You will have noticed that in the monetary policy statement that I just read, we do refer to the upside risk to inflation in our projection. So the situation having changed, we need to continue to monitor it very carefully. We need to assess the situation on the basis of the data, and then we will have to take a judgement. What’s more, Lagarde didn’t repeat her December phrase that raising interest rates in 2022 is “very unlikely”. When asked about that, she replied: as I said, I don’t make pledges without conditionalities and I did make those statements at our last press conference on the basis of the assessment, on the basis of the data that we had. It was, as all pledges of that nature, conditional. So what I am saying here now is that come March, when we have additional data, when we’ve been able to integrate in our analytical work the numbers that we have received in the last few days, we will be in a position to make a thorough assessment again on the basis of data. I cannot prejudge what that will be, but we are only a few weeks away from the closing time at which we provide the analytical work, prepare the projections for the Governing Council, and then come with some recommendations and make our decisions. It sounds very innocent, but it’s worth remembering that Lagarde is probably the most dovish central banker in the world (let’s exclude Turkish central bankers who cut interest rates amid high inflation, but they are under political pressure from Erdogan). After all, global monetary policy is tightening. For example, last week, the Bank of England hiked its main policy rate by 25 basis points and started quantitative tightening. Even the Fed will probably end quantitative easing and start raising the federal funds rate in March. In such a company, the ECB seems to be a reckless laggard. Hence, even very shy comments mean something in the case of this central bank. The markets were so impressed that they started to price in 50 basis points of rate hikes this year, probably in an exaggerated reaction.   Implications for Gold What does the latest ECB monetary policy meeting mean for the gold market? Well, maybe it wasn’t an outright revolution, but the ECB is slowly reducing its massive monetary stimulus. Although the euro area does not face the inflationary pressure of the same kind as the US, with inflation that soared to 5% in December and to 5.1% in January (according to the initial estimate), the ECB simply has no choice. As the chart below shows, inflation in the Eurozone is the highest in the whole history of euro. Additionally, in the last quarter of 2021, the GDP of the euro area finally reached its pre-pandemic level, two quarters later than in the case of the US. Europe is back in the game. The economic recovery strengthens the hawkish camp within the ECB. All of this is fundamentally bullish for gold prices. To be clear, don’t expect that Christine Lagarde will turn into Paul Volcker and hike interest rates in a rush. Given the structural problems of the euro area, the ECB will lag behind the Fed and remain relatively more dovish. However, German bond yields have recently risen, and there is still room for further increases. If the market interest rates go up more in Europe than across the pond, which is likely given the financial tightening that has already occurred in the US, the spread between American and German interest rates could narrow further (see the chart below). The narrowing divergence between monetary policies and interest rates in the US and in the Eurozone should strengthen the euro against the greenback – and it should be supportive of gold. As the chart above shows, when the spread was widening in 2012-2018, gold was in the bear market. The yellow metal started its rally at the end of 2018, just around the peak of the spread. On the other hand, if the divergence intensifies, gold will suffer. Given that Powell is expected to hike rates as soon as March, while Lagarde may only start thinking about the tightening cycle, we may have to wait a while for the spread to peak. One thing is certain: it can get hot in March! If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Will Oil (BRENT) Call For A Oxygen Cylinder? It Climbed Really High...

Will Oil (BRENT) Call For A Oxygen Cylinder? It Climbed Really High...

Alex Kuptsikevich Alex Kuptsikevich 15.02.2022 15:22
Events in recent weeks have brought back interest in assets that have benefited from tensions in previous decades, with gold rising as insurance against currency destabilisation and oil rising on fears of surging demand and shortages of supply if sanctions constrain supplies from Russia. Interestingly, the West is trying to balance sanctions restrictions on oil as more encouraging comments come out of the talks with Iran. In our view, oil is very expensive, climbing to current heights faster than the economy can afford it. This rise is caused by geopolitical tensions around Russia, which acts as the world's largest energy exporter by a wide margin. Fears about the stability of future supply have so far outweighed any negatives, but it is still prudent to zero in on geopolitical influences over the medium to long term. And with that in mind, the oil price looks unsustainably high, vulnerable to a corrective pullback once the dust of military hardware settles. About 12 years ago, we saw a similar picture when oil prices recovered quickly. And then, the result was another round of global economic weakness, which also knocked down demand for commodities and forced regulators to postpone policy normalisation steps. Will it be like that now? Quite possibly, and then in the second half of the year, oil could turn sharply to correction and cause another shock for the economy. In recent weeks, significant factors are potentially capping price rises with increased drilling activity. Also, Russia will ramp up production as most of the wells are in areas with a harsh climate. Looking locally, we can see how quickly any declines in oil over the last three months are being bought out. In such an environment, oil could soon find itself in short squeeze territory, with short positions being forced to close due to rising prices. This mirrors what we saw in April 2020. It is difficult to predict the peak price level in such an environment. It would be an ideal market picture if the short squeeze occurred at the end of April on another major expiry, paying homage to events two years earlier. And ideally, if we saw a price return to the $112 area where the bear market in oil started in July 2014. But this is an idealised picture. The reality is likely to be less mathematically accurate, as so much is now tied to the actions and comments of policymakers.
Oh, Someone Has Stopped Brent Oil Price From Going "Out Of Range"

Oh, Someone Has Stopped Brent Oil Price From Going "Out Of Range"

Alex Kuptsikevich Alex Kuptsikevich 18.02.2022 13:20
Gold and oil, former beneficiaries of geopolitical tensions late last week, have gone their separate ways, with the former rising 2.4% and the latter losing 5% since the start of this week. Brent crude rolled back below $90 and, at one point on Friday, was losing 2.3% to $89, despite still worrying reports of tensions around Ukraine and Russia. It has fallen below the local support of the past ten days and is now just one step away from a decline since the start of the month. While geopolitics remains a joker capable of playing, either way, the macroeconomic picture is working to cool the oil price. US commercial oil inventories rose last week against a seasonally typical decline. As a result, inventories are now 10.9% lower than a year earlier, although it was -15% in mid-January. Production stagnated at 11.6m b/d, but at the end of last week, there was an increase in the number of operating oil rigs from 497 to 516. New data will be released later this evening. Probably, we will see more evidence that producers have stepped up production, convinced of the strength of demand and record profits in many years at their disposal. Locally, the activation of extractive companies is playing into the price pullback from current levels. However, it is a factor in slowing price growth in the longer term, but not a failure. The vector of monetary policy is also worth paying attention to. Rising rates often derail speculative growth in oil. We saw the last two examples on this theme in 2014-2015 when oil collapsed by 75%, and in 2018, it fell by 45%. After those hard lessons, OPEC+ has worked much more closely to meet quotas, so we are talking about a correction rather than a new bear market for oil. Speaking of a local correction, we assume a pullback in the Brent price to the $85 area. That is the peak area in October last year and September 2018 and close to the 38.2% Fibonacci retracement level of the rally from December to mid-February. Deeper drawdowns are also possible if monetary tightening coincides with geopolitical détente and slowing demand. In that case, Brent might briefly correct towards $80. Positive signals on the Iran deal are also factors holding oil back. An agreement with Iran would signal an easing of some of the geopolitical tensions in the Middle East and add around 1% to the global energy system, allowing the resulting shortfall to be digested and a smooth return to restocking for the world.
Our Attention Should Be Drawn To Fed As Well, An Increase Of Interest Rate Is Likely To Come

Our Attention Should Be Drawn To Fed As Well, An Increase Of Interest Rate Is Likely To Come

Chris Vermeulen Chris Vermeulen 15.02.2022 15:31
The FED has made it very clear that it will raise its benchmark interest rate, the federal funds rate. This could have severe consequences and even lead to a financial crisis. They are too far behind the curve and will be labeled a major policy error in the future, most likely. They have put themselves in a situation where they are now their own hostage. They need more leadership to describe what a soft landing is going to look like. They have been too slow to act, and now they are going too fast. The “Powell Put” has now been put out to pasture. We believe that the FED will make more rate hikes than they have announced. Goldman Sachs thinks there will be four 25-basis-point increases in the federal funds rate in 2022. Jamie Dimon, CEO of JPMorgan Chase, said, “he wouldn’t be surprised if there were even more interest rate hikes than that in 2022. There’s a pretty good chance there will be more than four. There could be six or seven. I grew up in a world where Paul Volcker raised his rates 200 basis points on a Saturday night.” Mr. James Bullard of the St. Louis FED spoke out in an arrogant tone that aggressive action is now required. The markets translated this to mean that the FED was going to call an emergency meeting as soon as this coming week to hike interest rates by no less than 50 basis points. This sent interest rates soaring and stock prices plummeting. WARNING: More Downside To Come Uncertainty abounds regarding the path of inflation and new FED policy. This has created a landscape of continued strong periods of distribution in the equity markets. If there are any bounces, they should be used to sell ‘risk assets’. This has been one of the worst starts to a calendar year in the history of the stock and bond markets. Chart Source: Zero Hedge Last Thursday, the reported inflation rate increased by 7.7 percent, the highest in forty years. Stocks tumble as red-hot inflation print pressures technology shares. Markets didn’t like this, which immediately moved them down. Bears are in control of the market, which can be observed from Friday’s trading session. The U.S. 10-year yield rose above 2% for the first time since August 2019 amid a broad Treasury-market selloff. It was driven by expectations for quicker FED interest-rate hikes to contain faster than predicted inflation. It takes at least two to three years to have any material impact on the economy. One sector is currently doing well, which is the oil sector. Cycle's analysis is applied to find the best stocks to invest in and the best sectors. The next sector we are monitoring is Gold/Silver. Crude oil prices are staying strong. There are a lot of geopolitical factors in play here. I think there's a risk premium on oil right now because of Russia. What The Heck is CPI? The Consumer Price Index, CPI, is the measure of changes in the price level of a basket of consumer goods and services. This is one of the most frequently used statistics for identifying periods of inflation in households. Consumer Price Index Summary. Last Thursday, the inflation figures were released, confirming that everything is getting more expensive. It is up 7.5 percent versus last year. Mortgage rates are starting to rise. If you plan to buy a new home, this is the time to do it. These historically low interest rates will not last long. Should I Invest In Gold Today? Owning gold acts as a hedge against inflation as well as a good portfolio diversifier as it is a great store of value. Gold also provides financial cover during geopolitical and macroeconomic uncertainty. Gold has historically been an excellent hedge against inflation because its price tends to rise when the cost-of-living increases. Conclusion: It seems the stock market may be on its last leg here. Big money flow has been coming out of the large-cap stocks while commodities have been rising. Commodities are typically one of the last assets to rally before the stock market top and start a bear market. I see all the signs, but we must wait for the price to confirm before taking action. We have seen this setup before in 2015/2016, also in 2018, and the market recovered and rallied dramatically from those levels.  What Trading Strategies Will Help You To Navigate Current Market Trends? Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets are starting to transition away from the continued central bank support rally phase and may start a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern start to drive traders/investors into Metals. I invite you to learn more about how my three Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking the following link:   www.TheTechnicalTraders.com 
Tension Beetween Ukraine And Russia Definetely Shaped News In Recent Days

EURGBP - Does The Single Currency Strengthen? Bearish GER 40 Ahead?

John Benjamin John Benjamin 23.02.2022 08:52
EURUSD bounces off support The euro surged over signs that Moscow may remain open to diplomacy. The pair found support at the base of the previous rally (1.1290), indicating the bulls’ commitment to keeping the rebound intact. The RSI’s oversold situation attracted a slew of bargain hunters betting on a lengthy rebound. A break above 1.1390 would prompt sellers to cover and pave the way for a sustained recovery. The recent peak and daily resistance at 1.1490 is a major hurdle. Its breach could extend the rally to 1.1600. EURGBP attempts reversal The sterling whipsawed after BOE officials’ comment about a “modest” rate hike over the coming months. The euro saw strong bids at the base of the February breakout rally (0.8310). A break above 0.8370 wiped out some selling interest, a prerequisite for a meaningful recovery. 0.8400 is the next resistance and its breach would further boost buyers’ confidence and propel the single currency to the recent high at 0.8475. On the downside, a bearish breakout would invalidate the rebound pattern and cause a sell-off below 0.8280. GER 40 breaks floor Trepid sentiment continues to weigh on the Dax. The plunge below the 9-month long consolidation area (14850) may foreshadow a bear market. As traders grew wary, trapped bulls would look to get out of their positions while the bears saw any rebound as an opportunity to sell into strength. An oversold RSI brought in some bids and 14850 is the immediate resistance. However, the index would remain under unless it lifts offers around 15200. Otherwise, the psychological level of 14000 would be the next stop.
USDJPY, XAUUSD And Standard And Poor 500 Recovering After Noticeable Fluctuations

USDJPY, XAUUSD And Standard And Poor 500 Recovering After Noticeable Fluctuations

John Benjamin John Benjamin 25.02.2022 09:04
USDJPY bounces off daily support The US dollar jumps as traders seek safe haven assets over the Russia-Ukraine conflict. The pair struggled for bids after it turned away from the double top (116.20) and has been grinding down a falling trend line. However, the daily support at 114.40 has proved to be a solid demand area by keeping February’s rebound intact. Strong momentum above the trend line and 115.20 forced sellers out of the game and would attract more purchasing power. A close above 116.20 would extend the rally towards 117.00 XAUUSD seeks support Gold whipsawed as markets await the Western response to the invasion of Ukraine. The rally accelerated after it broke above last June’s high at 1912. Momentum trading pushed the price to September 2020’s highs (1975) before reversing its course. 1880 is a fresh support after intraday buyers took profit. As sentiment shifts to the bullish side, the current pullback combined with a depressed RSI could trigger a bargain-hunting behavior. Renewed buying frenzy may send the metal to the psychological level of 2000. US 500 lacks support The S&P 500 weakens as investors fear spillover from the conflict in Ukraine. A break below the daily support at 4280 further put the bulls on the defensive. Last May’s lows, near 4040, are the next target as liquidation continues. The index may have entered the bear market as the sell-off could speed up in the coming weeks. On the daily chart, the RSI’s double-dip in the oversold area may offer a temporary relief. 4350 is the first hurdle ahead and the bears may look to fade any rebound amid soured sentiment.
It's Not Surprising That Gold (XAU) Is Topping The Headlines Again

It's Not Surprising That Gold (XAU) Is Topping The Headlines Again

Arkadiusz Sieron Arkadiusz Sieron 25.02.2022 14:49
  As the COVID-19 pandemic has shown, it is worth being better prepared for a possible crisis. Does that mean it pays to have some gold up your sleeve? I have to confess something. I always laughed at preppers (aka survivalists) – people who spend their entire lives stockpiling beans and ammo in preparation for the highly unlikely doomsday scenarios. C’mon, who would take these freaks seriously? Well, as the pandemic and supply crisis showed us, we all should. When most people scrambled for masks and hand sanitizers, preppers laughed. When most people fought epic battles for toilet paper and something to eat to survive the Great Lockdown, preppers laughed. When most people were confronted with surging inflation and supply shortages of different products, preppers laughed. When most people panicked upon hearing about energy blackouts, preppers laughed. It seems that mocked preppers got the last laugh, after all. Hence, the COVID-19 epidemic made it clear that the world is not a paradise flowing with milk and honey and that bad things do really happen, so we should be more prepared for possible calamities, even if they look like remote possibilities. For example, experts now point out the threat of cyberattacks, and just last month, Kazakhstan’s government turned off the internet nationwide, depriving its citizens of access to their bank accounts. The problem is, of course, that crises always seem highly unlikely until they occur. Meanwhile, historical cases are too distant and abstract for us, and we tend to think that “this time is different”, or that “we’ll make it through somehow.” Perhaps you will, but it’s much easier when you are prepared. When other people panic, you don’t, because you have made your preparation and have a clear plan of action. You see, the issue is not if the crisis hits, but when. It’s just a matter of time, even the government suggests storing at least a several-day supply of non-perishable food. However, the problem is that when things are going well, people don’t think about preparing. Why should we worry and spoil the fun? Let’s drink like tomorrow never comes! Maybe the problem will somehow disappear by itself, and if it doesn’t, we’ll deal with it later. I got it, but how does it all relate to gold? Well, quite simply. Owning gold is a part of preparing for the worst. This is because gold is the store of value that appreciates when confidence in fiat money declines. It’s also a safe-haven asset, which shines during financial crises when asset prices generally decline. The best example may be the Great Recession or 2020 economic crisis when gold performed much better than the S&P 500 Index, as the chart below shows. You can also think of gold as a portfolio insurance policy or a hedge against tail risks. A house fire is not very likely, but it’s generally smart to have insurance, you know, just in case. Similarly, the collapse of the financial markets and the great plunge of asset prices are not of great probability (although the Great Depression, late 2008, and early 2020 show that they are clearly possible), but it’s nice to have a portfolio diversifier that is not afraid of black swans. In a sense, the whole issue boils down to individual responsibility. Do you take responsibility for your life and for being prepared for different scenarios, or do you count on other people, the government, or simply luck, magically thinking that everything always goes well? To be clear, being prepared doesn’t equal being pessimistic – it’s rather about being realistic and hoping for the best, but planning for the worst. However, there are two important caveats to consider before exchanging all of your paper currency for gold coins. First, you shouldn’t conflate holding gold as insurance with gold as an investment asset. When you want protection, you’re not interested in price trends. There might be a bear market, but gold would still fulfill its hedging role. This is also why you shouldn’t own more than about 5-10% of your whole portfolio in precious metals (as insurance, you can invest more in gold as an investment or as a part of your trading strategy). Second, don’t treat gold as a panacea for all possible disasters. It all depends on what you are preparing for. If you expect power outages, buy batteries, power banks, and think about alternate sources of energy. Precious metals won’t power your home. If you fear a zombie apocalypse (who doesn’t?), flamethrowers and rifles seem to be better weapons than gold bars (although large ones can serve quite well). If you can’t wait for a nuclear explosion (who can?), you will need a proper shelter with uncontaminated food rather than shiny metal (pun intended). It’s possible that in such a post-apocalyptic world, people would initially return to a commodity-based standard rather than the gold standard. It all depends on the particular conditions and how deeply the civilization would devolve. Hence, don’t be scared by dodgy people and false advertising into buying gold because of imminent hyperinflation, the total collapse of the financial system, nuclear greetings from Kim Jong-Un, or another calamity. The role of gold is not to rescue you from all kinds of troubles, but to be insurance that pays off during economic crises. Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care.
S&P 500 At Tipping Point To Start  A Bear Market And What You Need To See

S&P 500 At Tipping Point To Start A Bear Market And What You Need To See

Chris Vermeulen Chris Vermeulen 03.03.2022 21:38
Is a bear market on the way? My research suggests the downward sloping trend line (LIGHT ORANGE in the Daily/Weekly SPY chart below) may continue to act as solid resistance – possibly prompting a further breakdown in the markets for US major indexes.As we've seen recently, news and other unexpected events prompt very large price volatility events in the US major indexes. For example, the VIX recently rose above 30 again, which shows volatility levels are currently 3x higher than normal levels.Increased Volatility & The Start Of An Excess Phase Peak Should Be A Clear WarningThis increased volatility in the markets, coupled with the increased fear of the US Fed and the global unknowns (Ukraine, China, Debt Levels, and others), may be just enough pressure to crush any upside price trends over the next few months. Technically, my research suggests the $445 to $450 level is critical resistance. The SPY must climb above these levels to have any chance of moving higher.Sign up for my free trading newsletter so you don’t miss the next opportunity! Unless the US markets find some new support and attempt to rally back towards recent highs, an “Excess Phase Peak” pattern will likely continue to unfold throughout 2022. This unique price pattern appears to have already reached a Phase 2 or Phase 3 setup. Please take a look at this Weekly GE example of an Excess Phase Peak pattern and how it transitions through Phase 1 through Phase 4 before entering an extended Bearish price trend.Read this research article about Excess Phase Peaks: HOW TO SPOT THEN END OF AN EXCESS PHASE - PART 2SPY May Already Be In A Phase 4 Excess Peak PhaseThis Daily SPY chart highlights my analysis, showing the major downward sloping trend line, the Middle Resistance Zone, and the lower Support Zone. Combined, these are acting as a “Wedge” for price over the past few weeks – tightening into an Apex near $435~440.If the US major indexes attempt to break this downward price trend, then the price must attempt to move solidly above this downward sloping price channel and try to rally back into the Resistance Zone (near $445~$450). Unless that happens, the price will likely transition into a deeper downward price move, attempting to break below recent lows, near $410, and possibly quickly moving down to the $360 level.SPY Weekly Chart Shows Consolidation Near $435 – Possibly Starting A Phase 4 Excess PeakTraders should stay keenly aware of the risks associated with the broad US and global market decline as the Ukraine war, and other unknowns continue to elevate fear and concerns related to the global economy. In my opinion, with the current excess global debt levels, extended speculative market bubbles, and the continued commodity price rally, we may be starting to transition away from an extended growth phase and into a deeper depreciation cycle phase.My research suggests we entered a new Depreciation cycle phase in late 2019 and are already more than 25 months into a potential 9.5-year global Depreciation cycle. What comes next should not surprise anyone.Read this article about Depreciation Cycle Phases: HOW TO INTERPRET & PROFIT FROM THE RISKS OF A DEPRECIATION CYCLE Traders should stay keenly focused on market risks and weaknesses. I expected the conflict in Ukraine to have been priced into the US markets over the past 7+ days. However, I believe the markets were unprepared for this scale or invasion and will attempt to settle fair stock price valuation levels as the conflict continues. This is not the same US/Global market Bullish trend we've become used to trading over the past 5+ years. Looking Forward - preparing for a possible Bear marketMarket dynamics and trends are changing from what we have experienced over the past 40 years for stocks and bonds. The 60/40 portfolio is costing you money now. Traders need an edge to stay ahead of these markets trends and to protect and profit from big trends.The only way to navigate the financial markets safely, no matter the direction, is through technical analysis. By following assets and money flows, we identify trend changes and move our capital into whatever index, sector, industry, bond, commodity, country, and even currency ETF. By following the money, you become part of new emerging trends and can profit during weak stock or bond conditions.Want Trading Strategies that Will Help You To Navigate Current Market Trends?Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets are starting to transition away from the continued central bank support rally phase and may start a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern start to drive traders/investors into Metals.I invite you to learn more about how my three Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking the following link:   www.TheTechnicalTraders.com 
How You Can Minimize Trading Risk & Grow Capital During A Global Crisis

How You Can Minimize Trading Risk & Grow Capital During A Global Crisis

Chris Vermeulen Chris Vermeulen 09.03.2022 22:39
To minimize trading risk and grow capital during a global crisis is somewhat hinged on the answers to speculative questions. How long will the Russia – Ukraine war last? How high is the price of oil and gas going to go? How quickly will central banks raise interest rates to counter high inflation? What assets should I put my money into? Knowing what the Best Asset Now (BAN) is, is critical for risk management and consistent growth no matter the market condition!‘BUY THE DIP’ or ‘SELL THE RALLY’? - DJI Weekly ChartAs of 3/8/22, YTD returns are: DJIA -10.20%, S&P 500 -12.49%, Nasdaq 100 -18.70%The Dow Jones Industrial Average traded as high as 36952.65 on January 5, 2022The DJIA put in a Covid 2020 Low of 18213.65 on March 23, 2020. When you double the price of this significant low, you get a price of 36427.30, which the DJIA reached on November 4, 2021. This was precisely 591 calendar days from the 2020 low. The 200% level seems to have capped the bull rally. If, in fact, this is the top and the start of a bear market, we should experience high volatility both up and down. However, the highs and lows should be lower as the market begins to trend lower. The volatility will also continue to increase as the market deflates and continues to lose capital.Sign up for my free trading newsletter so you don’t miss the next opportunity! It appears this scenario may very well coincide with the fundamental current events of high inflation, central banks unable to add stimulus, having to raise their interest rates, and current/future geopolitical events.What-To-Do Before the Storm Hits“Have A Plan and Stick-To-Your-Plan”There are some basic strategies or practices that professional traders utilize to minimize trading risk and grow capital. Here are a few ideas:Bull/Bear Markets – In an upmarket, you should buy the dips. In a down market, you should do the opposite and sell the rallies. Rallies in a down 'bear' market tend to be very fast and short-lived.Diversification – Don't have your eggs in too many baskets. It is better to navigate thru a storm by focusing your resources specifically rather than generally.Leverage – Reduce leverage, position size, or know how you will respond to different percentage losses or gains. Understand what your investment objective is as well as your tolerance for risk. If you're having trouble sleeping at night, you should reduce your holdings to the place where you are comfortable.Leverage is a mathematical equation, and it does not have to be 1x, 2x, etc. It can also be 0.75x, 0.50x, etc. You get to decide what's best for you and your family. Leverage is also a double-edged sword! Be careful, especially when the markets are on edge and volatile.Where is the Institutional Money Going?The global currency market, otherwise known as Forex or FX, is the largest market in the world. According to the BIS Triennial Central Bank Survey, published on December 8, 2019, by the Bank for International Settlements, it has an average daily transactional volume of $6.6 trillion.By tracking global money flow, we can get a pretty good idea of where the smart money is going. For now, let’s see what has happened during the last 6-months.According to www.finviz.com, we notice that the US Dollar, despite its Covid stimulus spending spree, was the preferred currency. However, the Eurodollar has seen substantial outflows decreasing by -7.60%, which is entirely understandable with the Russia – Ukraine War at their doorstep.Global central banks ponder how quickly to raise interest rates in order to curb high inflation!According to TradingEconomics, the current global interest rates by major country are: United States 0.25%, Japan -0.10%, Switzerland -0.75%, Euro Region 0.00%, United Kingdom 0.50%, Canada 0.50%, and Australia 0.10%.The US Federal Reserve may have been looking to raise interest rates by as much as 50 basis points at its next policy meeting. However, given Russia’s invasion of Ukraine, the FED may become more cautious and consider raising interest rates by only 25 basis points on March 15-16. We need to pay close attention to this high-impact market event.What strategies can help you minimize trading risk and grow capital?Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Minimizing risk in order to grow your capital must remain a primary focus for all investors and traders. Now is the time to keep your eye on the ball!I invite you to learn more about how my three Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
NZDUSD Trades Higher, XAGUSD Nears $25.50-26 Range, US 30 Chart Shows Fluctuations

NZDUSD Trades Higher, XAGUSD Nears $25.50-26 Range, US 30 Chart Shows Fluctuations

Jing Ren Jing Ren 11.03.2022 07:40
NZDUSD consolidates gains The New Zealand dollar inched higher supported by roaring commodity prices. A break above the daily resistance at 0.6890 has put the kiwi back on track in the medium term. A bullish MA cross on the daily chart suggests an acceleration to the upside. As sentiment improves, the bulls may see the current consolidation as an opportunity to accumulate. A close above 0.6920 would extend the rally to 0.7050. 0.6800 is the first support and 0.6730 over the 30-day moving average a key demand zone. XAGUSD seeks support Silver consolidates amid ongoing geopolitical instability. A bearish RSI divergence suggests a deceleration in the rally. A tentative break below 25.40 has prompted some buyers to take profit. While sentiment remains optimistic, a correction might be necessary for the bulls to take a breather. The psychological level of 25.00 is a major demand zone. Its breach could send the precious metal to 24.30 which sits on the 30-day moving average. A rally above 26.90 could propel the price to last May’s highs around 28.50. US 30 struggles for buyers The Dow Jones 30 turned south after talks between Russia and Ukraine stalled again. A rebound above 34000 has provided some relief. Nonetheless, enthusiasm could be short-lived after the index gave up all recent gains. The prospect of a bear market looms if this turns out to be a dead cat bounce. A fall below 32300 could trigger another round of liquidation and push the Dow to a 12-month low at 30800. On the upside, 33500 is the first resistance. The bulls will need to lift offers around 34100 before they could attract more followers.
Are Current Market Cycles Similar To The GFC Of 2007–2009?

Are Current Market Cycles Similar To The GFC Of 2007–2009?

Chris Vermeulen Chris Vermeulen 14.03.2022 16:14
Soaring real estate, rising volatility, surging commodities and slumping stocks - Sound Familiar?This past week marked the 13th anniversary of the bottom of the Global Financial Crisis (GFC) of 2007-2009. The March 6, 2009 stock market low for the S&P 500 marked a staggering overall value loss of 51.9%.The GFC of 2007-09 resulted from excessive risk-taking by global financial institutions, which resulted in the bursting of the housing market bubble. This, in turn, led to a vast collapse of mortgage-back securities resulting in a dramatic worldwide financial reset.Sign up for my free trading newsletter so you don’t miss the next opportunity! IS HISTORY REPEATING ITSELF?The following graph shows us that precious metals and energy outperform the stock market as the ‘Bull’ cycle reaches its maturity. The stock market is always the first to lead, the second being the economy, and the third, being the commodity markets. But history has shown that commodity markets can move up substantially as the stock market ‘Bull’ runs out of steam.The current commodities rally in Gold began August 2021, Crude Oil April 2020, and Wheat in January 2022. Interestingly we started seeing capital outflows in the SPY-SPDR S&P 500 Trust ETF in early January 2022, and the DRN-Direxion Daily Real Estate Bull 3x Shares ETF starting back in late December 2021.LET’S SEE WHAT HAPPENED TO THE STOCK AND COMMODITY MARKETS IN 2007-2008SPY - SPDR S&P 500 TRUST ETFFrom August 17, 2007 to July 3, 2008: SPDR S&P 500 ETF Trust depreciated -20.12%The State Street Corporation designed SPY for investors who want a cost-effective and convenient way to invest in the price and yield performance of the S&P 500 Stock Index. According to State Street’s website www.ssga.com, the Benchmark, the S&P 500 Index, comprises selected stocks from five hundred (500) issuers, all of which are listed on national stock exchanges and span over approximately 24 separate industry groups.DBC – INVESCO DB COMMODITY INDEX TRACING FUND ETFFrom August 17 2007 to July 3, 2008: Invesco DB Commodity Index Tracking Fund appreciated +96.81%Invesco designed DBC for investors who want a cost-effective and convenient way to invest in commodity futures. According to Invesco’s website www.invesco.com, the Index is a rules-based index composed of futures contracts on 14 of the most heavily traded and important physical commodities in the world.BE ALERT: THE US FEDERAL RESERVE POLICY MEETING IS THIS WEEK!In February, the inflation rate rose to 7.9% as food and energy costs pushed prices to their highest level in more than 40 years. If we exclude food and energy, core inflation still rose 6.4%, which was the highest since August 1982. Gasoline, groceries, and housing were the most significant contributors to the CPI gain. The consumer price index is the price of a weighted average market basket of consumer goods and services purchased by households.The FED was expected to raise interest rates by as much as 50 basis points at its policy meeting this week, March 15-16. However, given the recent world events of the Russia – Ukraine war in Europe, the FED may decide to be more cautious and raise rates by only 25 basis points.HOW WILL RISING INTEREST RATES AFFECT THE STOCK MARKET?As interest rates rise, the cost of borrowing becomes more expensive. Rising interest rates tend to affect the market immediately, while it may take about 9-12 months for the rest of the economy to see any widespread impact. Higher interest rates are generally negative for stocks, with the exception of the financial sector.WILL RISING INTEREST RATES BURST OUR HOUSING BUBBLE?It is too soon to tell exactly what the impact of rising interest rates will be regarding housing. It is worth noting that in a thriving economy, consumers continue buying. However, in our current economy, where the consumers' monthly payment is not keeping up with the price of gasoline and food, it is more likely to experience a leveling off of residential prices or even the risk of a 2007-2009 repeat of price depreciation.THE POTENTIAL FOR OUTSIZED GAINS IN A BEAR MARKET ARE 7X GREATER THAN A BULL MARKET!The average bull market lasts 2.7 years. From the March low of 2009, the current bull market has established a new record as the longest-running bull market at 12 years and nine months. The average bear market lasts just under ten months, while a few have lasted for several years. It is worth noting that bear markets tend to fall 7x faster than bull markets go up. Bear markets also reflect elevated levels of volatility and investor emotions which contribute significantly to the velocity of the market drop.WHAT STRATEGIES CAN HELP YOU NAVIGATE CURRENT MARKET TRENDS?Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24 months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe we are seeing the markets beginning to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern start to drive traders/investors into metals, commodities, and other safe havens.IT'S TIME TO GET PREPARED FOR THE COMING STORM; UNDERSTAND HOW TO NAVIGATE THESE TYPES OF MARKETS!I invite you to learn more about how my three Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
Oil Prices Keep Falling. Is It Time to Get Long on Black Gold?

Oil Prices Keep Falling. Is It Time to Get Long on Black Gold?

Sebastian Bischeri Sebastian Bischeri 16.03.2022 16:43
  Crude oil continues to decline due to lowered demand, and the petrodollar seems threatened, losing interest. What is the best strategy to take now?  Oil prices kept falling this week, driven by potential progress in Ukraine-Russia talks and a potential slowdown in the Giant Panda’s (China) economic growth due to epidemic lockdowns in some regions where a surge of Omicron was observed. As I mentioned in my previous article, India considers getting Russian crude oil supplies and other commodities at a reduced price by settling transactions through a rupee/rouble payment system. Meanwhile, we keep getting rumors – notably reported by The Wall Street Journal – that Saudi Arabia and China are also currently discussing pricing some Saudi oil exports directly in yuan. The Chinese are actively seeking to dethrone the dollar as the world’s reserve currency, and this latest development suggests that the petrodollar is now under threat. US Dollar Currency Index (DXY) CFD (daily chart) The recent correction in crude oil, happening just seven days after reaching its 14-year highs, might show some signs that the conflict in Ukraine will slow down consumption. On the other hand, if Iranian and Venezuelan barrels flooded the market, we could see crude oil, petroleum products, and distillates turning into new bear markets. WTI Crude Oil (CLJ22) Futures (April contract, daily chart) Brent Crude Oil (BRNK22) Futures (May contract, daily chart) RBOB Gasoline (RBJ22) Futures (April contract, daily chart) Henry Hub Natural Gas (NGJ22) Futures (April contract, daily chart) That’s all folks for today – happy trading! Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Sebastien BischeriOil & Gas Trading Strategist * * * * * The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
China Stocks Go Up As There Might Be More Buybacks Coming

Hang Seng Index (HSI) Has Increased Significantly Yesterday

Chris Vermeulen Chris Vermeulen 17.03.2022 13:08
THE SHANGHAI COMPOSITE INDEX HAS DROPPED MORE THAN 40% FROM ITS PEAK IN JUST 2 ½ MONTHS! China Stocks: This morning bottom pickers around the globe are snatching up what they believe to be “bargain basement priced stocks” as the Hang Seng Index gained 9.1% during today’s March 16, 2022 trading session. It was the best day for the HSI since the 2008 financial crisis as the Chinese government pledged to support markets. Tensions are running high as Chinese nickel giant Tsingshan Holding Group, the world’s biggest producer of nickel used in stainless steel and electric-vehicle batteries was sitting on $8 billion in trading losses. According to the Wall Street Journal on March 9, 2022 “The London Metal Exchange suspended the nickel market early last Tuesday, the first time it had paused trading in a metal contract since the collapse of an international tin cartel in 1985. The decision followed a near doubling in prices over a few hours.” ETFs CAN BE USED SPECIFICALLY FOR SEASONS AND DIRECTION! According to Statista www.statista.com on January 11, 2022, the assets managed by ETFs globally amounted to approximately 7.74 trillion U.S. dollars in 2020. With more than 8,000 ETFs to choose from, you can find just about any flavor you need or are looking for. A Kondratieff Wave is a long-term economic cycle that consists of four sub-cycles or phases that are also known as Kondratieff Seasons. This theory was founded by Nikolai D. Kondratieff 1892-1938 (also spelled “Kondratiev”), a communist Russia-era economist who noticed agricultural commodities and metals experienced long-term cycles. The following graph illustrates both the inflation cycle as well as the best investments for each season. The Kondratieff Seasons act as a general guide and each investment has their own specific bull or bear market cycle. ETFs CAN OFFER YOU PROTECTION AND AGILITY IN A BULL OR BEAR MARKET!  The following ETFs are not a recommendation to buy or sell but simply an illustration to emphasize the utilization of selecting an ETF for capital protection or potential appreciation in either a rising ‘BULL’ or falling ‘BEAR’ market. YINN – DIREXION DAILY FTSE CHINA STOCKS BULL 3X SHARES ETF From February 17, 2021, to March 14, 2022 the Direxion Daily FTSE China Bull 3x Shares ETF ‘YINN’ lost -90.78%. Target Index: The FTSE China 50 Index (TXINOUNU) consists of the 50 largest and most liquid public Chinese companies currently trading on the Hong Kong Stock Exchange as determined by the FTSE/Russell. Constituents in the Index are weighted based on total market value so that companies with larger total market values will generally have a greater weight in the Index. Index constituents are screened for liquidity, and weightings are capped to limit the concentration of any one stock in the Index. However, one cannot directly invest in an index. According to Direxion’s website www.direxion.com, Leveraged and Inverse ETFs pursue leveraged investment objectives, which means they are riskier than alternatives that do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. YANG – DIREXION DAILY FTSE CHINA STOCKS BEAR 3X SHARES ETF From February 17, 2021, to March 14, 2022, The Direxion Daily FTSE China Bear 3x Shares ETF gained +418.38%. The rates of return shown for the YINN and YANG ETFs are not precise in that they are an estimation as displayed on a chart utilizing the charts measurement tool to emphasize my talking point. Sign up for my free Trading Newsletter to navigate potential major market opportunities! ALERT: THE US FEDERAL RESERVE INTEREST RATE WAS RASIED A QUARTER POINT! In February, the inflation rate rose to 7.9% as food and energy costs pushed prices to their highest level in more than 40 years. If we exclude food and energy, core inflation still rose 6.4%, which was still the highest since August 1982. Gasoline, groceries, and housing were the biggest contributors to the CPI gain. The FED was expected to raise interest rates by as much as 50 basis points. However, investors are speculating that due to the Russia – Ukraine war, the FED may be more cautious and raise rates by only 25 basis points. WHAT STRATEGIES CAN HELP YOU NAVIGATE The CURRENT MARKET TRENDS with US and CHINA STOCKS? Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24 months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe we are seeing the markets beginning to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern start to drive traders/investors into metals, commodities, and other safe-havens. UNDERSTAND HOW TO NAVIGATE OUR VOLATILE MARKETS! GET READY, GET SET, GO -I invite you to learn more about how my three ETF Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
GOLD – Potential Bullish Reversal!

Can Disinflation Support A Decline Of Price Of Gold?

Arkadiusz Sieron Arkadiusz Sieron 18.03.2022 15:13
  Inflation continues to rise but may soon reach its peak. After that, its fate will be sealed: a gradual decline. Does the same await gold?If you like inviting people over, you’ve probably figured out that some guests just don’t want to leave, even when you’re showing subtle signs of fatigue. They don’t seem to care and keep telling you the same not-so-funny jokes. Even in the hall, they talk lively and tell stories for long minutes because they remembered something very important. Inflation is like that kind of guest – still sitting in your living room, even after you turned off the music and went to wash the dishes, yawning loudly. Indeed, high inflation simply does not want to leave. Actually, it’s gaining momentum. As the chart below shows, core inflation, which excludes food and energy, rose 6.0% over the past 12 months, speeding up from 5.5% in the previous month. Meanwhile, the overall CPI annual rate accelerated from 7.1% in December to 7.5% in January. It’s been the largest 12-month increase since the period ending February 1982. However, at the time, Paul Volcker raised interest rates to double digits and inflation was easing. Today, inflation continues to rise, but the Fed is only starting its tightening cycle. The Fed’s strategy to deal with inflation is presented in the meme below. What is important here is that the recent surge in inflation is broad-based, with virtually all index components showing increases over the past 12 months. The share of items with price rises of over 2% increased from less than 60% before the pandemic to just under 90% in January 2022. As the chart below shows, the index for shelter is constantly rising and – given the recent spike in “asking rents” – is likely to continue its upward move for some time, adding to the overall CPI. What’s more, the Producer Price Index is still red-hot, which suggests that more inflation is in the pipeline, as companies will likely pass on the increased costs to consumers. So, will inflation peak anytime soon or will it become embedded? There are voices that – given the huge monetary expansion conducted in response to the epidemic – high inflation will be with us for the next two or three years, especially when inflationary expectations have risen noticeably. I totally agree that high inflation won’t go away this year. Please just take a look at the chart below, which shows that the pandemic brought huge jumps in the ratio of broad money to GDP. This ratio has increased by 23%, from Q1 2020 to Q4 2021, while the CPI has risen only 7.7% in the same period. It suggests that the CPI has room for a further increase. What’s more, the pace of growth in money supply is still far above the pre-pandemic level, as the chart below shows. To curb inflation, the Fed would have to more decisively turn off the tap with liquidity and hike the federal funds rate more aggressively. However, as shown in the chart above, money supply growth peaked in February 2021. Thus, after a certain lag, the inflation rate should also reach a certain height. It usually takes about a year or a year and a half for any excess money to show up as inflation, so the peak could arrive within a few months, especially since some of the supply disruptions should start to ease in the near future. What does this intrusive inflation imply for the precious metals market? Well, the elevated inflationary pressure should be supportive of gold prices. However, I’m afraid that when disinflation starts, the yellow metal could suffer. The decline in inflation rates implies weaker demand for gold as an inflation hedge and also higher real interest rates. The key question is, of course, what exactly will be the path of inflation. Will it normalize quickly or gradually, or even stay at a high plateau after reaching a peak? I don’t expect a sharp disinflation, so gold may not enter a 1980-like bear market. Another question of the hour is whether inflation will turn into stagflation. So far, the economy is growing, so there is no stagnation. However, growth is likely to slow down, and I wouldn’t be surprised by seeing some recessionary trends in 2023-2024. Inflation should still be elevated then, creating a perfect environment for the yellow metal. Hence, the inflationary genie is out of the bottle and it could be difficult to push it back, even if inflation peaks in the near future. Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care.
Bitcoin Price Hits $42k, ETH And AVAX Have Decreased, Polkadot (DOT) Gained

Bitcoin Price Hits $42k, ETH And AVAX Have Decreased, Polkadot (DOT) Gained

Alex Kuptsikevich Alex Kuptsikevich 23.03.2022 09:12
BTC rose 3.5% on Tuesday. At the peak of the day, the rate exceeded $43.2K, but by Wednesday morning, it rolled back to $42K, demonstrating a 0.7% correction. Growth without solid reasons? Bitcoin tested 19-day highs above $43,000 supported by stock indexes with Chinese equities predominantly pulling it. BTC rose sharply during the Asian session, adding about $2,000 in a few hours, although a corrective mood then prevailed. Bitcoin clearly doesn't have a reason for a solid establishment on the path of growth yet. Ethereum is losing 1% over 24 hours, while other leading altcoins from the top ten showed mixed dynamics yesterday: from a decline of 2.7% (Avalanche) to a rise of 3.8% (Polkadot). According to CoinMarketCap, the total capitalization of the crypto market decreased by 0.5%, to $1.91 trillion. The Bitcoin dominance index fell by 0.1% to 41.9%. The Cryptocurrency Fear and Greed Index added another 5 points to 31, although it remains in a "fear" state. BTC is ready for sharp swing At the moment, on-chain metrics are consistent with a bear market, Glassnode notes. The rise in implied volatility and higher leverage in the derivatives market point to the possibility of a sharp swing in bitcoin. However, the sell-off in "defensive" developed-country government bonds continues in financial markets as investors park their money in stocks and commodities that provide the best hedge against prolonged and high inflation. At the same time, there are no clear signs of an economic and financial catastrophe that could hurt stocks or commodities. The world's largest hedge fund Bridgewater Associates plans to invest in one of the third-party crypto funds, pointing to the risks for fiat currencies, which lose sharply during periods of military and economic wars.
Is There Any Gold in Virtual Worlds Like Metaverse?

Is There Any Gold in Virtual Worlds Like Metaverse?

Finance Press Release Finance Press Release 25.03.2022 12:15
Imagine all the people… living life in the Metaverse. Once we immerse ourselves in the digital sphere, gold may go out of fashion. Or maybe not?Do you already have your avatar? If not, maybe you should consider creating one, as the Metaverse is coming! What is the Metaverse? It is a digital, three-dimensional world where people are represented by avatars, a network of 3D virtual worlds focused on social connection, the next evolution of the internet, “extended reality,” and the latest buzzword in the marketplace since Facebook changed its name to Meta. If you still have no idea what I’m talking about, you can watch this or just Spielberg’s Ready Player One.The idea of personalities being uploaded online is an intriguing concept, isn’t it? In this vision, people meet with others, play, and simply hang out in a digital world. Imagine friends turning group chats on Messenger or WhatsApp into group meetups in the Metaverse of family gatherings in virtual homes. Ultimately, people will probably be doing pretty much everything there, except eating, sleeping, and using the restroom.Sounds scary? For people in their 30s and older who were fascinated by The Matrix, it does. However, this is really happening. The augmented reality technology market is expected to grow from $47 billion in 2019 to $1.5 trillion in 2030, mainly thanks to the development of the Metaverse. China’s virtual goods and services market is expected to be worth almost $250 billion this year and $370 billion in the next four years.In a sense, it had to happen as the next phase of the digital revolution. You see, we now experience much of life on the two-dimensional screens of our laptops and smartphones. The Metaverse moves us from a flat and boring 2D to a 3D virtual universe, where we can visualize and experience things with a more natural user interface. Let’s take shopping as an example. Instead of purchasing items on Amazon, customers could enter a virtual shop, see and touch all products in 3D, and buy whatever they wanted (actually, Walmart launched its own 3D shopping experience in 2018).OK, we get the idea, but why does Metaverse matter, putting aside sociological or philosophical issues related to transferring our minds into the digital world? Well, it might strongly affect every aspect of business and life, just as the internet did earlier. Here are a couple of examples. Famous brands, like Dolce & Gabbana, are designing clothes and jewelry for the digital world. Some artists are giving concerts in virtual reality. You could also visit some museums virtually, and instead of taking a business trip, you can digitally teleport to remote locations to meet with your co-workers’ avatars.Finally, what does the Metaverse imply for the gold market? Well, it’s difficult to grasp all the possible implications right now. However, the main threat is clear: as people immerse deeper and deeper into the digital world, gold could become obsolete for many users. Please note that cryptocurrencies and non-fungible tokens (NFTs) are and will continue to be widely used as payment methods in the Metaverse.However, there are some caveats here. First, the invention and spread of the internet didn’t sink gold. Actually, the internet enabled gold to be widely traded by investors all over the world. Just take a look at the chart below. Although gold was in a bear market in the 1990s and struggled during the dot-com bubble, it rallied after the bubble burst.Second, the digital world didn’t kill the analog reality. Despite digital streaming of music, vinyl record sales soared last year, reaching a record high in a few decades. The development of the Metaverse could trigger a similar backlash and a return to tangible goods like gold.Third, some segments of the Metaverse look like bubbles. Maybe I’m just too old, but why the heck would anybody spend hundreds of thousands, or even millions of dollars to buy items in the virtual world? These items include virtual real estates (CNBC says that sales of real estate in the metaverse topped $500 million last year and could double this year), digital pieces of art or even tweets (yup, the founder of Twitter sold the first tweet ever for just under $3 million)! It does not make any sense to me, as I can right-click and download a copy of the same digital files (like a PNG file of a grey pet rock) for which people pay thousands and millions of dollars.Of course, certain items could increase the utility of the game or virtual experience, but my bet is that at least some buyers simply speculate on prices, expecting that they will be able to resell these items to greater fools. When this digital gold rush ends – and given the Fed’s tightening cycle, it may happen in the not-so-distant future – real gold could laugh last.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care.
Bear market Friday

Bear market Friday

Jeffrey Halley Jeffrey Halley 06.05.2022 10:22
Equity markets take a tumble It’s a little hard to know where to start today after a massive risk aversion wave swept markets overnight, so let’s start where I believe the rot really began, the Bank of England policy decision overnight. The Bank of England raised rates by 0.25% to 1.0% in a split decision (three members wanted 0.50%), which was in line with expectations. It’s what they said, and not what they did, that saw sterling slump by 2.0%. The bombshell was the 2023 growth forecast, which was marked down massively to -0.25% from 1.25% previously.   The BOE basically said there was going to be a recession next year, somewhat at odds with the Federal Reserve’s statements that a soft landing was possible in the US. Overnight BOE officials basically said they were going to concentrate on tackling inflation because there wasn’t much they could do to offset a slowdown. UK consumers would, unfortunately, have to endure rising costs of living and recession headlock that would make Stone Cold Steve Austin proud. It is of little surprise that the BOE doesn’t intend to start reducing its GBP 875 billion balance sheet yet. The only positive being the BOE will likely hike rates in small increments and let markets themselves do most of the dirty work.   That is somewhat at odds with Fed Chairman Powell’s comments that the Fed would be able to engineer a soft landing for the US economy as it scrambles to get on top of inflation. Given the economics PHDs were adamant that inflation was “transitory” last year, I’m struggling to fully buy into that, and so it seems, is the street. I argued yesterday that hiking rates by 0.50% a meeting while scaling up quickly to sell USD 95 billion of bonds and MBS a month off their balance sheet wasn’t dovish at all. Also, Mr Powell’s comments had left plenty of wiggle room to hike by 0.75% if needed. 0.50% hikes could be as “transitory” as inflation. Markets seemed to come to that realisation overnight, US 10-year yields climbed back through 3.0% and stayed there, and everyone knows about the bonfire in equity markets.   The Reserve Bank of India blinked on inflation this week as well with their unscheduled rate hike. I actually applaud them for this; there’s no shame in effectively admitting you were incorrect and acting decisively to sort the mess out. Even an ECB member said overnight that a rate hike would be considered at the June meeting. Considering and doing are two different things though, although if EUR/USD is around parity, their thoughts might be focused. However, their rightful get-out-of-jail card is that they are rapidly moving to oversight of a pseudo-wartime economy.   Master fence-sitting vacillators, the Reserve Bank of Australia, though, haven’t made too many friends with their guidance. Hiking rates by 0.25% earlier this week, while still playing the dovishly hawkish card. The RBA Statement of Monetary Policy this morning though, told a rather different message and I’m wondering if they were hoping nobody was watching because it’s Friday. It massively raised trimmed mean inflation forecasts to 4.75% by December 2022, and 3.25% by December 2023, with core-inflation remaining above the 2-3% target band until 2024. It said it was appropriate to start normalising interest rates and that further increases would be needed to restrain inflation. Australian equities would have been battered today after the Wall Street slump overnight anyway but would probably have suffered a similar fate anyway after the RBA SoMP release.   Slowly but surely, the central bank fence-sitters are being dragged into the inflation fight, even if they are fighting dovish rear guard actions. The reality that inflation has returned to the world after 20 years, that the 15 year run of the cost of capital is zero per cent is over, or that we can no longer rely on central banks to reverse flow wealth transfers to homeowners and equity investors and corporate debt Caligula’s via quantitative easing, appears to be dawning on the world. We may well have reached peak globalisation and with China slowing, a process in place pre-covid-zero I might add, and a war in Eastern Europe that will price shock the world’s food and energy value chains, it is little surprise that equity markets might be having second thoughts about valuations, even at these levels.   And still, the week isn’t over, with US Non-Farm Payrolls still to come. Market expectations are for around 400,000 jobs to be added, roughly the same as March, with unemployment edging lower to 3.50%. A sharp divergence, up or down, from the median forecast, should produce a very binary outcome given the schizophrenic nature of the short-term financial markets at the moment. A print north of 500,000 should provoke a faster tightening by the Fed possible recession equals selling equities, bonds, gold, cryptos, DM and EM FX, buy US dollars reaction. Conversely, a print under 300,000 should see a sigh of relief less Fed tightening rally. Buy equities, bonds, gold, cryptos, DM and EM currencies and sell US dollars. It’s that sort of market.   Thankfully, most of us still have our weekends free, but if one wants to watch the direction of travel for market sentiment, the crypto-space this weekend might be interesting to watch, especially if we get some headline bombs. Bitcoin held support perfectly ahead of support at USD 37,400.00 on Wednesday, rising 5.20% in the general post FOMC relief rally. Overnight, it lost around 8.0% and traded as low as USD 35,600.00, crashing through the triangle support at USD 37,400.00. Negative developments over the weekend could spur a sell-off to around USD 32,000.00 settings Monday up for a bad start. If risk sentiment continues plummeting, the chicken bones on the technical charts suggest bitcoin could be on its way to USD 28,000.00 and then USD 20,000.00. HODL on for dear life.   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Gold fights heroically against adverse conditions

Gold Price Fails Essential Support, But The Bulls Still Have A Chance | FxPro

Alex Kuptsikevich Alex Kuptsikevich 13.05.2022 11:34
A sell-off in the equity market and a new wave of flight to the dollar on Thursday provided the perfect combination to knock out gold, which slipped to $1810 in thin trading on Friday morning, falling to its lowest level since early February. The current decline in the price makes us keep a close eye on further developments Right now, it’s up to gold to decide whether we see a double top formation or whether the bulls are gaining strength and liquidity ahead of a new multi-month rising momentum. The current decline in the price makes us keep a close eye on further developments. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM A consolidation of the week under $1830 would reinforce that signal Yesterday, gold took a sharp plunge under the 200 SMA, which is often a bearish factor for the instrument. A consolidation of the week under $1830 would reinforce that signal. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM A potential bull target, in this case, could be the $2500 area This would open the way for another roughly 25% drop into the $1350 area, the area of the 2015-2018 highs. If we see an uptick in buyers’ in the hours and days ahead, we could say that gold is in a correction. Potentially, a reversal to the upside from these levels could signal the start of a new wave of long-term growth, the first impulse of which was in 2018-2020, followed by a prolonged wide side trend. A potential bull target, in this case, could be the $2500 area.
A decrease in US inflation will return market optimism

What are investors afraid of? | Conotoxia

Conotoxia Comments Conotoxia Comments 18.05.2022 15:42
As it does every month, Bank of America conducts a survey of fund managers with nearly $900 billion AUM. Its results in the May edition seem very interesting, indicating the risks and actions of institutional investors. According to the survey, investors appear to be hoarding cash as the outlook for global economic growth falls to an all-time low and fears of stagflation increase. Cash holdings among investors have reached their highest level since September 2001, according to the report. A survey this month of investors managing $872 billion also found that hawkish central banks are seen as the biggest risk to financial markets. A global recession came in second, and concerns about stagflation rose to their highest level since 2008. The findings could show an uninspiring outlook for global equities, which are already on track for their longest weekly losing streak since the global financial crisis, as central banks turn off the tap on money at a time of stubbornly high inflation. The BofA report said the stock market may be in a bear market, but the final lows have not yet been reached. More interest rate hikes by the Federal Reserve are still expected, and the market is not yet in full capitulation. The BofA survey also found that technology stocks are under the most pressure since 2006. Overall, investors were most attuned to holding cash, and are least inclined to go for: emerging market stocks, eurozone stocks and bonds at the moment. The report also found that the so-called most crowded trades at the moment are long positions on oil (28%), short positions on U.S. Treasury bonds (25%), long on technology stocks (14%), and long on bitcoin (8%). According to the respondents, the value to which the S&P 500 index would have to fall for the Fed to start refraining from further monetary policy tightening falls at the level of 3529, i.e. about 12% below the current level. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Estimating Future Stock Returns, March 2022 Update

Estimating Future Stock Returns, March 2022 Update

David Merkel David Merkel 14.06.2022 05:51
Image credit: All images belong to Aleph Blog Well, finally the bear market… at 3/31/2002 the S&P 500 was priced to return a trice less than zero in nominal terms. After the pasting the market received today, that figure is 3.57%/year nominal (not adjusted for inflation). You would likely be better off in an ETF of 10-year single-A rated bonds yielding 4.7% — both for safety and return. I will admit that my recent experiment buying TLT has been a flop. I added to the position today. My view is that the long end of the curve is getting resistant to the belly of the curve, and thus the curve is turning into the “cap” formation, where the middle of the curve is higher than the short and long ends. This is a rare situation. Usually, the long end rallies in situations like this. The only situation more rare than this is the “cup” formation where the middle of the curve is lower than the short and long ends. I will have to update my my old post of “Goes Down Double-Speed.” We’ve been through three cycles since then — bear, bull, and now bear again. People get surprised by the ferocity of bear markets, but they shouldn’t be. People get shocked at losing money on paper, and thus the selloffs happen more rapidly. Bull markets face skepticism, and so they are slow. What are the possibilities given where the market is now? When the market is expecting 3.57% nominal, give or take one percent, what tends to happen? Most of the time, growth at these levels for the S&P 500 is pretty poor. That said, market expectations of inflation over the next ten years are well below the 4.7% you can earn on an average 10-year single-A rated corporate bond. Those expectations may be wrong — they usually are, but you can’t tell which way they will be wrong. I am still a believer in deflation, so I think current estimates of inflation are too high. There is too much debt and so monetary policy will have more punch than previously. The FOMC will panic, tighten too much, and crater some area in the financial economy that they care about, and then they will give up again, regardless of how high inflation is. They care more about avoiding a depression than inflation. They will even resume QE with inflation running hot if they are worried about the financial sector. The Fed cares about things in this order: Preserve their own necksPreserve the banks, and things like themFight inflationFund the US GovernmentPromote nominal GDP growth, though they will call it reducing labor unemployment. The Fed really doesn’t care about labor unemployment, or inequality. They are a bourgeois institution that cares about themselves and their patrons — those who are rich. I know this post is “all over the map.” My apologies. That said, we in a very unusual situation featuring high debt, high current inflation (that won’t last), war, plague, and supply-chain issues. How this exactly works out is a mystery, especially to me — but I am giving you my best guess here, for whatever it is worth. It’s worth than double what you paid for it! Full disclosure: long TLT for clients and me